Stripe Enables Fiat-to-Crypto On-ramp | DeFi & KYC a Bad Match?

  • The Fiat-to-Crypto on-ramp service provides a remedy for web3 businesses.

  • A programmable widget can be integrated into dApps and platforms.

  • The move has the potential to push cryptocurrency payments into the mainstream.

03 Dec 2022 By: Rohit Khandelwal
Stripe Enables Fiat-

Despite this year's bear market, payment giants like 

Stripe remain optimistic about cryptocurrency. The company has just unveiled services that will allow companies to convert paper currency into cryptocurrency.

On December 1, payments giant Stripe announced an in-built and configurable fiat-to-crypto on-ramp. The new service will allow companies to enable their users to exchange fiat currency for cryptocurrency. Furthermore, it has provisions for compliance, fraud prevention, and know-your-customer (KYC).

Stripe stated in its blog post that blockchain-based gaming companies, for example, could use the new widget to enroll gamers and allow them to add funds into wallets. The new widget is customizable, can be integrated with a company's existing product, and aims to reduce the need for businesses to combine multiple third-party services to swap fiat currency and cryptocurrency.

Stripe's introduction into the Web3 market, as one of the world's largest payment processing businesses, represents a chance to expand the number of clients of blockchain-based companies.

Stripe Entering the Web3 Space

The San Francisco-based company is a prominent player in the online payments sector. It processes online purchases for companies like Apple and Walmart, among others. Stripe currently supports cryptocurrency payouts in 67 countries. Its latest development is a step toward mainstreaming cryptocurrency/Web3.

It's also worth noting that this isn't Stripe's first foray into Web 3. In March, it teamed with some web3 companies in its first major crypto move. This followed its initial announcement in October 2021 of plans to establish a crypto-focused engineering team.

The company also recently completed a $600 million Series H funding round, bringing its total valuation to $95 billion. 

However, it should be noted that, despite the fact that DeFi has housed multiple hacks, this service was mostly used by DEXs. It indicates that DeFi has the potential to go more mainstream. But can Defi and regulations co-exist?

Will Defi & Regulations Be Able To Co-Exist?

The fallout of FTX has raised concerns about the management of users' funds, which may lead to strict crypto regulations in the future. Surprisingly, these regulations will apply to both DEX and CEX.

However, that’s not the primary concern, the concern is that Critics say that any form of KYC would transform a DeFi application into a centralized service. And we all know that KYC is the first and most important element that a crypto regulation entails.

Although, experts noted that this is not necessarily true because the KYC check does not have to be performed by a central entity. Instead, DeFi protocols could provide systems that allow trusted third parties, such as identity providers, to undertake KYC and authenticate the ownership of a crypto wallet.

All this indicates that DeFi will undoubtedly experience widespread adoption in the future, and Stripe is just fueling the engine to accelerate the adoption rate.

Read also: Do Not Trade on DEX! Ankr Confirmed Exploits in aBNB Tokens