Fiat On-ramping to Accelerate User Acquisition | European Blockchain Convention 9

[Music] very good morning everyone my name is Gareth jenkinson I'm uh a journalist and broadcaster from South Africa I've been working in the cryptocurrency space for a little over seven years as a writer for coin Telegraph I now work for them full-time uh for over a year now and it's a great pleasure to be hosting this panel this morning um as the title suggests uh fat onramps remain a crucial first step in onboarding uh new users for Crypton native businesses in particular and of course the world is uh still predominantly fat-based and uh having pay payment rails and uh banking services that cater to the cryptocurrency uh sector remains a big hurdle and this panel features three individuals that are working exclusively in the space and they'll be unpacking the landscape its current state and the many challenges that it faces so I think we'll start start from the left and and let you all introduce yourselves and chat a little bit more about the companies that you work for and what they do because they they are very integral in this this space in particular right first of all very good morning everyone it's a it's a pleasure to be here my name is Jana and I'm the chief executive of open paid as I said earlier I feel that uh being surrounded by all of that Innovation uh I represent the boring side of things the traditional side of things um in a nutshell open paid is a regulated fin finial institution we are an Emi in the UK as well as in Europe and really the core of our offering is banking and payments infrastructure for amongst other Industries the uh the crypto industry vertical so we really specialize uh in helping many of the people that I see around the room and as well as on on on that panel bring payments through bank transfers through virtual iband is in traditional theat money into their system to really power The Innovation that uh they take care of onward so that's us in a nutshell Samuel good morning Samuel Rondo I'm the managing director at DX in jalta we are regulated DLT license since 2018 we are Specialist of on and off romp for higher risk category of client we attend to I gaming Forex family office and hedge funds basically we convert very large amount of crypto to Fat of to crypto we have uh we can serve three currencies uh Euro Sterling and dollars and uh we've been uh uh transacting over $2 billion last year uh so we are the first step into the crypto world and the last step out of it Shimon svich uh co-founder and CEO of ramp Network um ramp network is a single API access platform to um the worldwide um Fiat system system uh you can Implement our API or SDK into your app and get access um to a regulatory and uh compliance and Tech setup that allows your users to buy and sell crypto all across the world um we are um quite worldwide uh we are headquartered in the UK but we also have entities in Brazil us um Ireland and operate across APAC as well the value proposition is um for companies that are building retail crypto products um to plug in our platform and offer a much easier much better way for their users to access crypto products with their credit cards debit cards local payment methods uh Bank transfers and the aim here is to make the transition to uh crypto enabled products so smooth and seamless that people would stop noticing that they are trying now interacting with an entirely new um Tech setup so ideally for those of you who used modern neobanks such as revolute um it should like getting into a crypto product should resemble topping up your uh revolute app and um the system enabling it should be Global because all of your web free products are Global and this is what we are building as a journalist work in the space since 2017 I've seen the evolution of especially crypto companies really struggling to get banking partners and payment rails to service customers and uh it it's really is an interesting topic especially for the sector um I think for those that don't really understand why feat on ramping is important maybe we can just unpack that very quickly just to understand why this is an integral part of driving adoption of cryptocurrencies around the world Yana maybe you can you can go first you guys work with quite a few big players in the cryptospace crypto.com and the likes yeah absolutely so just just to put things into perspective today we process over3 billion Euro of volume on a monthly basis and we've issued over uh 2 million accounts to different exchanges many of those exchanges are here with us on on the floor the reality is that there is a not just a level of mistrust there is a growing and growing and growing level of mistrust on behalf of both Regulators as well as traditional holders of access to payment rails whether that's the sepa network or it's the Swift Network whether you call them Banks or systems that manage those payment rails in so far as the crypto world is concerned and I guess fundamentally at least at this stage I believe that the mistrust is um something that we can address very easily and one of our jobs is to really try and help bridge that Gap because fundamentally if we can address the concerns around um identity and traceability Aro money lawn drink on the traditional side of things I believe that we can bridge that Gap now I'm going to leave it to the rest of the panel to explain why it is so important to bridge that Gap in order to drive that that mainstream adoption but I believe that we cannot separate in between the two worlds I believe that we need to work in collaboration to meet the standards as someone said said earlier on a different panel we cannot go against the SEC we we should not go against the SEC we should not go against the regulator but rather try and address the main risks that are being raised as a concern in order to drive to drive that uh HMO is one would say in French Samuel for you yes just taking a step back why are bankk mostly allergic to crypto and um we we deal every single day with client which are having reputational issue with a bank account because they want to interact with the crypto world it's simply a misunderstanding of the tool and the principle um so I think what the space is is pivoting to is some specialist actor which have the team in place which have the understanding of how it works of the AML process and so on and um and then the this activity is going to be separated uh from from the Traditional Bank what is interesting is with actors like open paid or or others um they are definitely crypto-friendly so you can compartiment your activity with those actors and then the let's say you do a crypto to Fat payment within an iband that you go with open paid or another actor and then you move this money towards your main bank account it's a completely different AML process and the bank will not have a problem with that even if they ask documentation about it because the whole AML and due diligence process has been done before so I think that's that's what matters we need to um create some actors which are Ultra specialist of the space uh and create a simless experience I like what you say just like uh you know for users it's very cumbersome and uh we need to create this this user uh um agility and understanding the process and then uh it's only a matter of uh getting in in and out of the crypto world with is so um what was mentioned is very important so it is very important to work hand in hands with Regulators uh as Yana said it is very important to forge strong Partnerships um with banking partners and institutional Partners um but the rapper of all that is great technology and what we do at ramp is to uh broker this trust between uh players in the ecosystem and use strong Partnerships with players uh like open paid um and maybe damx in the future and to create a product that is really delightful to use I think that un ramping is important because crypto is so powerful that it can be used for many things some of these things touch um areas that are strongly regulated however we all hope that crypto would would would be used in areas that are more casual more lowkey like payments or maybe nfts or um uh maybe crossborder transactions and remittances however um the way the regulation here is structured is that crypto is being treated as if it was uh pretty much a um mostly a security or investment uh instrument and as such there are a lot of barriers one has to uh overcome to be able to use crypto and so if we want to bridge the gap and start using an instrument that is regulated as if it was uh a financial instrument to uh let people use it in casual situations uh we need to create a technology that allows people um to comply with the regulatory requirements in a way that feels like you are uh paying online as if you are using an e-commerce platform and it is a big technological challenge because yes you need to do kyc yes you need screen your user yes you need to do uh AML checks um and these are things that typically take uh hours or even days when you get unwed to brokerage uh service however the user uh uh who is trying trying to buy an nft or uh do a crossb transfer or something else that is very casual expects it to work just as if it would be an e-commerce payment and so to bridge this Gap um requires all of us together to work very hard and like uh we at Ram try to be at the very Forefront of this transformation um and I think when we bridge this Gap we' be able to unlock a lot of the uh potential of with three so all the things that we discuss all over again things that make sense in princip principle but in practice do not make sense because of the friction this is our mission Gareth if I may just add one more point just building on on what Shimon was saying there I think 100% the the the the technology and The Innovation within the the from a technological standpoint is absolutely critical but there is another aspect that I I just want to emphasize on by giving one example and that's the matter of conduct as well because I guess all the players here on on the panel they are effectively trying to do the right thing whether it's partnering with um whether it's beefing up their compliance regulatory understanding and expertise whether it's developing the technology it doesn't matter what we also need to recognize however is that that mistrust that that you were just talking about is driven by the fact that there are and there have been historically actors in The Marketplace very large actors in The Marketplace that were not necessarily striving to do the right think and I'll give you an example in the not so long distant future we were approached by a very very large exchange I'm not going to name names but one of the if not the biggest exchange to essentially adopt our payment rails and virtual iband solution and we said that's fine but we want to see how your kyc and uh control framework operates and what we realized is that they would allow a user to load $2 million on a daily basis and they would renew the $2 million limit it every day without asking you ever what is the source of the 2 million whereas based on our at the time I guess rules and regulations it was 20,000 and I'm just mentioning this to to put things into perspective and we simply could not not reach an agreement on this point and at that point obviously we as a business had to make a decision do we want to generate revenues very very quickly or do we want to walk away we made the decision to walk away well not everyone else in the industry did did but I guess the point I'm trying to make is the conduct and I guess the values behind the development of a business are equally important to actually Foster that environment of of trust I did want to just touch on um the difference between being a banking partner and a payment rail because they are two fundamentally different things but they they're tied together obviously open paid allows you to have digital iband right and then um you guys are a payments rail um how important or how difficult firstly is it for these cryptocurrency companies um to get a banking account um and why do they have to turn to a third party player like you in order to bridge the gap between a traditional bank and banking themselves because the banks at the moment are still like we don't want to touch this yeah that's that's that's a very difficult question first of all just to be clear open paid is not servicing the crypto industry exclusively we service a lot of financial institutions uh FX Brokers gaming inur tech and and and others um I wouldn't labor the point about regulation too much but I guess one of the main challenges that we see is that the technology the banking technology of incumbent Banks does not really correspond to the level of innovation and the level of of Speed and Agility that all of their products and customers require right and that is one of the main reasons why players infrastructure providers that can aggregate different payment rails different banks different channels actually exist because we can go to Shimon and give him a single API and allow him to get access to multiple countries multiple jurisdictions multiple currencies and have an equivalent level of service and experience across across the board a question is how difficult it is to get a bank account it's less like uh the first one is difficult second one is also difficult but uh you just need to make sure you don't lose them so I think the the point is is is the conversation between the partners um there's few actors which are well known to service the crypto industry I think their role is just to ensure that uh all your function uh and your process are in place to make sure that you serve them your client well and you respect the level of risk that you establish with them um on any day we can accept up to $100 million but we're not going to do that blindly and uh for any client so I think what what really matters is uh to build this community and um there's maybe I don't know 10 15 actors in Europe which are known as uh turn to Wars and which are trying to build together so I think events like this are super important for us to meet and to strengthen our own private Network and work in and inance I think that's the key the answer to the second question raised by Samuel how hard it is to open a bank account really um like the answer really depends on how specialized are you and um this is why web 3 companies choose to work us with us because we are regulatory technology uh specialist uh effectively so we are able to aggregate literally dozens of banking and payment provider Partners across the world to bridge the gap between Fiat and your audience and we do that in a way where we on board your users so um all the regulations uh that you need to specialize um in to be able to meet the requirements um are fundamentally met by us because we facilitate the entire trade and then user is able to take the crypto we send to them and uh interact with your platform form be a wallet nft uh Marketplace or uh potentially like a new gen defi um product the the thing here is that um it really doesn't make sense to build the pay in setup uh all over again so there is a space in uh in this industry for players who are going to Aggregate and bridge the gap build one platform and let dozens and dozens of web 3 products exchanges and um fintech products to build on top of it so uh this is ultimately the answer to be able to inspire that trust and uh build these Partnerships uh you need to be a specialist and to be a specialist you basically need to focus on um this particular activity only um and web3 companies are not built for this and that's very good but this is why they can partner up with companies like rmp um obviously we don't want to hop onto too long about regulation but Europe is pretty Progressive now with ma coming into effect probably in 2024 uh looking back is it easier now to set up this kind of infrastructure than it was two or three years ago and and do you see more players like yourselves entering the market to service the industry when you deal with regulator nothing is easy but you have some good Regulators around which are again it's a question of choosing the right Partners I think there's some jurisdiction which are grandfathered into ma meaning that the actual framework is already in place and the transition is going to be very smooth um what is a concern is I do believe that in Europe there is multiple jurisdiction which are not playing the the same game uh so we have you have some jurisdiction with a lot of vas authorization um just a a reminder that a vasp is just a a registration with the with the regulator that you trying to do things well but there will be no control so it's a it's a very light view on regulation compar yeah it's a tick boox compared to a regulated entity uh which there is still very few around uh which you have to uh regular audits on your function so it's it takes time you have to explain the process and so on so France is very Advanced Netherland is very Advanced I would mention Malta and luxemborg uh Island I I I think is also interesting but it's not everywhere so I think this transition period is going to be very interesting um but things are not easier today than they will be in 12 months time because we need ma to be in place to be implemented to be uh transposed in every single jurisdiction for us to be ready and to have a common and I cannot wait uh for this to happen just to have a common framework and a larger client base to attend to and if I may just add to that I guess there is a second Trend that we also need to recognize alongside MAA and that is the fact that many of the large players so if you take a kraken take a crypto.com take some of the really big exchanges all of them are now actually moving towards becoming electronic money institutions in their own right many of them are effectively thinking about mainstream credit institutional Li buiness is in thinking about becoming a bank so I think this is one Trend to to follow and then obviously building on the back of what you both said and what Shimon said earlier if you as a business do not have sufficient expertise sufficient resources to meet the ever growing compliance requirements then I would strongly recommend find the right partner like R like like others to actually help you meet meet those obligations because the bar is is is Conant stantly raising and and I don't think that this is going to stop Shimon maybe you can just touch on um The Way Forward how you see um being a payments rail improving U is it a case of financial institutions just becoming more educated on the cryptocurrency landscape and and Regulators just becoming more accepting I think all boils down to experience and uh uh specializing and I think that a couple of years ago there were no set standards and today there are standards that people feel very comfortable um about and this is mainly what's driving um more favorable approach and product development on the financial institutions side uh and I think this trend is only going to continue because there is a lot of uh very good Improvement uh in that area I don't even I don't know if people realize but um massive amounts of money and development time were invested across the industry uh into compliance my own company spent three or four quarters um building uh out our compliance Frameworks and platform uh exclusively uh in preparation for our Global expansion to New York and to comply with Mika as well um and I I I I would guess that many other companies um invested similar amounts of um resources uh to match highest compliance standards and I think very soon compliant standards applied and expected from crypto companies are going to match very closely and in certain areas even um you know outgrow uh what is expected from traditional payment uh institutions and this is a global Trend that uh is unavoidable um and I think that you know pendulum has swung uh the um Market uh responded very strongly by tightening up and investing more into these Frameworks and I think this is going to create a lot of trust and Goodwill um in the coming years and is going to be a very good fundament for um the entire industry to grow just just one word if I may um we've been talking a lot about uh onramp which is uh you send uh a transfer from your bank account or you pay with your credit card to buy crypto asset um this is very easy that is no headache the AML Trace is been done by a prior institution and uh uh this is the easy world so everybody going into the world of crypto have a fantastic time and usually a great experience where it's become really tricky is the other way around so if you're blessed and using the same actor um you're buying some Bitcoin you're going to sell the Bitcoin with same actor there's a chice that's kind of okay but as soon as you are touching millions and you are settling crypto that you receive for the purpose of processing and you want to sell this this is really where the drama starts and this is where things become really eque and and crazy and I think this is really where the the boning generally industry as a as a deep misunderstanding about the tools and so on um so yes there's a lack so blockchain is a perfect AML tool but it's the perfect AML tool in the right hands and with the right people to understand it you have the full price of the coin on the blockchain which is fantastic but if you have a user which is telling you a different story than the one that the blockchain is saying you have a problem and this is where you as users you need to keep the documentation and I know you've been in crypto because you want the freedom because you want to keep things a little bit more private and so on but unfortunately that concept doesn't reconcile well at all with the necessity of having to cash out at some point and um so keep the Tres keep the information keep the the the the story in line with what the blockchain is going to show and the experience is going to be much better for everyone but the only problem we have is off ROM is never on R just wanted we can help you with that let's talk after uh just by way of an example I was chatting to uh one of the co-founders of xrp Ledger and he told me a story about trying to get Finance um to buy a house in America a few years ago and he'd been working um as a developer for a very long time and he earned some Bitcoin um working uh basically doing some bug bounties for the Bitcoin community in early 2012 2013 so he'd earned this Bitcoin and eventually he wanted to sell that Bitcoin and turn it into Fiat so that he could pay for the house and the bank was like no where did you get this Bitcoin from we we need to we need to find out what the source of the funds was he had to go back and you know on the way back machine and prove that he had actually sold these bug bounties and earned this Bitcoin and provide them all the the the the contract addresses to you know to provide the payer Trail to say that this is where the Bitcoin came from it's legitimate and then he got his money and he bought the house so it is quite difficult I I think just as a last question it does seem like from the outside looking in the responsibility is now on third party players like yourselves to do the due diligence when it comes to serving uh especially cryptocurrency facing businesses is that the case I mean you just gave the example of saying to One exchange that was accepting 2 million every day like whoa guys sorry we can't actually do business with you yeah no absolutely I think the the responsibility ultimately lies with all of the players within the ecosystem a great word was used earlier Community it's about building that community and each player has has a part from our perspective It's a combination of having the right technology as well as the right expertise of the regulatory environment and the implications of it that are helping guide our customers on on that Journey Samuel yeah um I don't have really a position on this Shimon it's all about technology so um obviously to bridge the gap in a way that is um acceptable for regulators and meets their requirements and at the same time gives users experience that they need and expect um it is all about building Frameworks and Technology uh that is going to bridge the gap and we are still um on this journey and I think this problem is going to get solved quite soon but we are not quite there yet and this is why we need to push as the entire industry to build the technology then uh get the trust we need um from players who are not always technology first and then use that to be able to offer delightful experiences and then lock with three fantastic shiman Samuel Yana thank you very much for your time a round of applause for our panelists today thank [Applause] you