How Do Crypto Companies Build a Fiat Onramp and Offramp?

Buying an NFT or acquiring crypto can be a complicated process. This is especially true for people who are new to cryptocurrency, and even affects people familiar with the world of blockchain finance.

Problem: How blockchain is used in finance‍

The often-circuitous path to executing a single successful transaction—depositing fiat currency in one place, then transferring it to a separate wallet and using additional tools to make a crypto purchase or sale—is a high hurdle for attracting new adopters. For startups in the crypto space, that translates to challenges in growing users.

Solution: Fiat onramp and offramp

You can build a fiat onramp and offramp into your app by partnering with a banking as a service (BaaS) provider, such as Treasury Prime. By doing this, you will ensure a smoother user experience, make it easier for people to adopt your offering, and open up potential new streams of revenue.

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What is a fiat onramp?

A fiat onramp is a service for converting fiat currency such as U.S. dollars to cryptocurrency. In the majority of cases, somewhere along the line, a person needs a fiat onramp to acquire any sort of digital currency; they also need a fiat offramp if they want to take their money out of crypto and spend it in mainstream settings. 

If you don't invest in building that, your customers will have to turn to another tool, and that doesn't help your product at all. 

Fiat onramp example: Coinbase Wallet includes a fiat onramp and offramp, by allowing users to store fiat currency in the wallet and then convert it to crypto and back to fiat. Other apps also offer this feature, sometimes as their central value proposition. 

The key to building a fiat onramp is integrating bank accounts with your app. The most efficient way to do this is to go to a BaaS provider like Treasury Prime, who can match you with a bank and enable you to open white-labeled accounts for users directly through your platform. This ensures the bank will allow legitimate crypto transactions to go through, overcoming one of the biggest challenges to buying crypto, which is when banks decline transactions because they think anything crypto-related looks suspicious. 

Here’s what this set-up looks like from the vantage point of a crypto-centered fintech:

• Each of your customers has two accounts: One fiat and one crypto. Your company also operates its own pair of fiat and crypto accounts to facilitate exchanges. 
• When the customer buys crypto, they use funds from the fiat account they have opened on your platform in exchange for cryptocurrency, which is stored in their crypto account on your platform. 
• When the customer sells their digital assets, they can convert the proceeds to fiat held in their cash account on your platform.

The benefits of building a fiat onramp and offramp

With the right BaaS provider, integrating with a bank is straightforward and includes a supportive onboarding process. 

Here are the benefits of building these relationships and adding fiat products to your crypto exchange app: 

• Create a smoother user experience: Users will be less likely to have legitimate transactions declined because the bank overseeing the account interacting with your crypto exchange knows to expect the transactions. 
• Get to moving money faster: Because you and your bank partner will have already vetted users when they create accounts, compliance processes can move faster for individual transactions. 
• Attract users more easily: By simplifying the process and saving users money, you lower the barrier of entry to buying crypto, and that makes it easier for more people to use your app. 
• Keep the users you attract: Customers are more likely to keep money in the platform once they’ve deposited it there and they are more likely to return to your platform if it holds their money.

“A fiat on and offramp is one of the most critical features to make your app truly user-friendly,” says Treasury Prime Director of Fintech Sales Danny Cepin, who works with our crypto clients. “By bringing more of the payment experience in-house, your company can optimize customer stickiness and usage.”

Why not every crypto company has a fiat onramp

Given the benefits of building a fiat onramp, why doesn’t every crypto startup have one? 

There are two main reasons. The first is that, to date, few banks are crypto-friendly. To find a bank that will work with you on favorable terms, you have to do some searching.

“Crypto is like cannabis or other frontiers for banking. Most banks are just not going to be comfortable moving or storing money that has anything to do with those industries, and crypto just happens to be one of them,” says Cepin. 

The second reason is that navigating the fragmented banking rules around crypto is a bit complicated. Different states have different requirements around money transmitter licensing for crypto businesses. You will have to pursue multiple licenses to make your app widely available. If you work with a bank that understands crypto companies, they can help guide you in the process.

How Treasury Prime has built fiat onramp expertise

Functions unique to crypto apps, such as purchasing cryptocurrency, operate in the same manner as other payment and money transfer functions within our banking API. That means that we’re already experts at the tools your crypto startup needs to build its optimal UX. 

Treasury Prime Crypto Partnerships Lead Mike Hreben puts it this way: “This is what we're experts at. We have designed our system with the intention of giving you the flexibility to create the things you want to create.” 

What’s different about our approach in the BaaS space is that we’ve gone out of our way to recruit bank partners ready to meet your unique business model, we have an in-house team centered on crypto, and we’ve partnered with the best banking compliance companies to help guide you on that front as well. 

Here’s what to expect when you reach out to Treasury Prime for BaaS:

• Step 1: We’ll review your needs to identify what specific tools you’ll need.
• Step 2: We’ll match you with a bank partner who meets your needs, and provide you with the software to easily integrate.
• Step 3: We’ll assign your company its own dedicated customer success manager (CSM), who will walk you through implementation. 

A fiat onramp is the central hub that everything in your payment ecosystem revolves around. It’s where a great crypto user experience starts, and it lays the foundation for you to build out the financial products and features that make your platform unique. To build an app that acts as a magnet for new users, you need to give your users all the tools they need in one place. To build user loyalty, you also want those tools white-labeled with your brand. This is what the right BaaS setup allows. 

The Best Fiat Onramp for Crypto
Treasury Prime has the largest bank network in the industry, giving you the most flexibility and affordability at scale. We work with a growing network of more than a dozen banks. Once we match you up with a crypto-friendly bank, we will work hand-in-hand with you to build your fiat onramp/offramp.

If you want to be the next unicorn, you need a direct bank relationship and the best Baas company. To discuss how we can help your crypto company scale, contact us here. Want to learn more about our process? View our API reference or play around with our Developer Sandbox.