Introduction
Purchasing cryptocurrency with fiat currency serves as the primary entry point into Web3 for most users. This process—called on-ramping—and its reverse (off-ramping) form a heavily regulated sector globally. Companies must secure Money Transmitter Licenses (MTL) and implement KYC protocols. This article analyzes seven fiat-crypto gateway models, emphasizing legal frameworks, business strategies, and user experience.
Key Differentiators of Fiat-Crypto Gateways
1. Legal Requirements
- MTL (U.S.) or equivalent licenses (e.g., EU’s VASP, Australia’s RSP) are mandatory.
Case Studies:
- U.S.: State-by-state licensing via FinCEN, with biennial renewals.
- EU/UK: Single VASP registration (e.g., Lithuania’s宽松 policies) enables pan-EU operations.
👉 Explore crypto regulations by region
2. Business Models
- Supply Chain: Market makers → CEXs → Independent gateways → Aggregators.
- Revenue Streams: Spreads on liquidity trades + user fees.
3. User Experience
- Steps: KYC → On-ramp → Crypto-crypto → Off-ramp.
Fee Components:
- Payment method fees (e.g., 1–5% for cards).
- Hidden exchange spreads (0.5–2%).
- Distributor markups (e.g., +1% per intermediary).
- Blockchain gas fees (variable).
Seven Types of Fiat-Crypto Gateways
1. Centralized Exchanges (CEXs)
- Pros: Global licenses, 100+ fiat/crypto pairs, lowest fees (0.1–0.5%).
- Cons: Complex interfaces for beginners.
- Example: Binance Pay’s merchant APIs.
2. Independent Gateways (MoonPay, Transak)
- Pros: Streamlined UX, self-custody focus.
- Cons: Higher fees (1–5%), limited regional support.
- Example: MoonPay’s one-click widget.
3. Aggregators (TransitSwap, MetaMask)
- Pros: Multi-provider rate comparisons.
- Cons: Added distributor markups.
- Example: MetaMask’s embedded Transak/MoonPay options.
4. Crypto ATMs
- Pros: Anonymity (<$250 cash purchases).
- Cons: 5–20% fees, scarce off-ramps.
- Data: Only 22% support withdrawals.
5. Crypto Debit Cards
- Function: Off-ramp via POS spending (1–4% fees).
- Tax Note: Triggers capital gains.
- Example: FTX’s Visa card (discontinued).
6. Crypto Credit Cards
- Function: On-ramp via crypto cashback (e.g., Gemini’s 3% BTC rewards).
7. OTC Markets
- OTC Desks: For whales (>$100k trades; no slippage).
- P2P: Custom payment methods (e.g., Binance P2P’s escrow).
FAQs
Q1: Which gateway has the lowest fees?
A1: CEXs like Binance (0.1%)—but require full KYC.
Q2: Are crypto ATMs anonymous?
A2: For small amounts (<$250); no ID needed.
Q3: What’s the advantage of OTC?
A3: Best for large trades with price certainty.
Conclusion
Upstream gateways (CEXs) excel in liquidity breadth, while downstream services (ATMs, Aggregators) prioritize UX. Choose based on your needs: low fees, anonymity, or convenience.