Crypto Onramps and the Future of Web3 Access
Crypto is a growing industry with dozens of use cases, enabled by smart contracts and dApps.
This technology powers the Web3 ecosystem and is ideal for implementing any crypto business ideas. Smart contracts can be used to create lending platforms, decentralized exchanges, or crypto games.
Web3 applications typically run on blockchains like Ethereum or Solana.
It’s easy for seasoned crypto users to access these ecosystems. New users, however, need ways to buy crypto tokens with fiat currencies.
That’s where crypto onramp services are necessary. Onramps are platforms that allow users to exchange fiat money for crypto tokens.
They increase the accessibility of cryptocurrencies for regular users, thereby boosting the adoption of decentralized applications.
The Mechanics Behind Crypto Onramps
From the user’s perspective, crypto onramps are usually very simple to use.
These platforms let users purchase crypto using various payment methods, including debit and credit cards, Google Pay, Apple Pay, and PayPal.
Onramps typically ask you to register and link the account you’ll use to make the payment. Then, select the token you want to receive and complete the exchange.
How Fiat Becomes Crypto
Users who want to buy crypto with a credit card must complete the payment and comply with KYC requirements. This is implemented to verify the funds’ legitimacy. Then, the platform makes the conversion, which typically lasts only a few minutes, and delivers the funds to the user.
Any person who wants to use a crypto onramp should pay attention to the platform’s transparency. It’s important to check the exchange rate and fees, and to be extra careful about hidden charges. It’s also vital to double-check the receiving wallet’s address to avoid sending crypto to the wrong wallet.
Evolution of Onramp Solutions
Different types of on-ramp platforms evolved over the years. In the early days of crypto, onramp solutions were mainly P2P marketplaces and centralized exchanges. Now, we can find on-ramp features in decentralized exchanges and wallets.
Early Onramps: CEX-Only Models
The first prominent models of on-ramp services operated on centralized exchanges, such as Binance and Coinbase. On these platforms, users needed to create an account, submit their personal information, and comply with KYC measures.
Besides, these are custodial exchanges. It means the funds are stored on the exchange, so users need to withdraw them to their personal wallets. The withdrawal process usually charges high fees.
Rise of Embedded Onramps
Over time, especially as the Web3 ecosystem developed, onramp exchanges became much easier.
Now, it’s possible to buy crypto with fiat using wallets like MetaMask or Trust Wallet, for example. These two wallets are a key entry point to dApps because they can be integrated directly with Web3 protocols.
Multi-Chain and Layer 2 Support
The scope of these services also goes beyond the main Ethereum network. Paybis onramp supports dozens of cryptocurrencies and tokens from other networks — including Solana, BSC, and Tron, as well as Layer-2 networks like Base or Arbitrum. It gives investors a way to participate in the network’s DeFi protocols.
Onramps and Regulation
However, since onramp platforms rely on traditional payment services, they face stricter regulation. The need to comply with multiple legal frameworks requires providers to obtain licenses in certain jurisdictions.
This affects the areas where onramp platforms provide services, limiting their availability. Some countries or currencies, for example, may be blocked due to access to crypto onramps.
KYC and Compliance Requirements
To use onramp services, users must comply with KYC requirements when submitting personal information.
These requirements vary across different countries and providers. Usually, users would need to upload a government-issued ID card, full name, and address. Some platforms require biometric verification to verify a user’s identity.
Licensing Challenges
On the exchange side, they also need to obtain licenses to provide the service. This can be a challenging process as well, mainly because there isn’t a clear set of regulations worldwide.
The global scope of crypto trades, which isn’t bound by national borders, is hindered by different legal frameworks across jurisdictions.
While some countries are open about crypto investments, others may be very strict or even ban crypto trading. This issue delays the rollout of global solutions and limits access to the crypto ecosystem.
Privacy vs Access
Stricter rules for crypto onramp services are also an obstacle for investors who place great importance on their privacy. It can be hard to access crypto markets while keeping your financial history confidential.
Regulators often claim that these rules are implemented to prevent illegal transactions, such as money laundering or illicit markets. However, a harsh legal framework not only compromises users’ privacy rights but also hinders the adoption and development of the crypto industry.
What’s Next for Onboarding in Web3?
Despite that, the global trend is moving towards a more welcoming environment for crypto initiatives. Leading economies, like the US, are loosening their rules, and other jurisdictions are following suit.
Moreover, integration with popular platforms outside the crypto ecosystem, such as Telegram, enables more people to participate in Web3 dApps. Developers are also building solutions to make it easier for people new to crypto to join dApps without owning ETH.
P2P markets remain a solid choice for traders worldwide, as they aren’t bound by local regulations and offer privacy and flexibility that crypto traders appreciate.
