Why Getting a Fiat-Onramp is Difficult - a Basic Primer in Fintech Regulations

One of the most booming trends in the crypto market right now is crypto currencies and the decentralized technologies. Millions of individuals, thousands of organizations and governments have adopted the new trend, arriving to a global scale. This has led to the increase in the conversion of fiat currency to crypto coins and as a result, regulations have been set to control the massive exchange though some of the regulations have brought up a few complications.


Converting fiat to Bicoin or to any other trending digital coin is easy especially with the help of non-custodial and custodial cryptocurrency exchanges. There are valid reasons for regulators to control on-ramp however; Fintech regulations might have made the exchanges a bit difficult. Here are some of the aspects revolving around crypto coins, that have been affected by Fintech regulations and as a result getting a fiat on ramp has become difficult;

  • Availability of transactions
  • Verification & registration process
  • Cross border transactions
  • The speed of buying and selling
  • Fluctuations and the risks involved.
  • Trading Fees

1. Availability of Transactions

The American Tax Authority announced that Bitcoin should be taken as a commodity. This is to say that since it is possible for you to buy gold or silver, then you can buy Bitcoin. Nonetheless, the regulations still prohibited the buying of commodities.

This is one of the reasons why getting a fiat on-ramp has been so difficult since purchasing of commodities should not be limited. Investors and entrepreneurs may not have a problem with such a regulation because they are aware of the weight of it.

2. Verification & Registration Process

According to fintech regulations, there has to be a registration and verification process before any transaction or exchange can be completed. The registration process may take between 1-5 days.
The system has to verify your details and account to certify that the account belongs to you and not a robot, by checking your personal details and making sure they are correct and valid. Therefore, you cannot connect to your bank account to buy a crypto coin such as Bitcoin without going through the verification process.

The verification process is important since it promotes security. However, the verification process could take days or even weeks. The slow verification process is part of the reason why getting fiat on-ramp has been hard. This has been a major glitch on most cryptocurrencies including;

  • Bitcoin
  • Ethereum
  • Dash
  • Litecoin

3. Cross Border Transactions

Fintech regulations also touch on cross border transactions. Regulators have been campaigning for a digital currency that operates within the borders of a state, which they dictate. For example, Google has its own currency, which one can send as an email attachment. This only applies within the US border only.

Regulators are keen to monitor and regulate cross border transactions. However, it is not easy for them since digital bits are not limited by borders. A regulated global money transfer would be the best for the investors to avoid money laundering.


4. The speed of buying and selling
In regards to fintech regulations, volume limitations have impacted the speed of exchange and withdraws. ATMs have contributed to the increase of transaction speed. This is not a good option for investors and speculative buyers.

The availability of ATMs varies in different nations. There are countries that offer ATM services almost everywhere while in other countries these are scarce. Here is a statistics of BTM by country.

PayPal is an old online payment method which has made its way in the crypto market as well. A few exchanges are working with PayPal hence, giving a quicker mode of transaction. Nonetheless, there are still liquidity issues that apply despite the availability of fast transactions with websites offering PayPal transaction services.

For instance, We SellCrypto.com is a website which offers quick PayPal transactions. It stopped trading abruptly without notifying its users. Other exchanges have minimum requirements for withdrawing funds to PayPal, while other websites invite users to store their funds on their platforms which is risky.

5. Fluctuations and Risk Involved

Another reason why getting fiat on-ramp has not been as easy is the rate of fluctuations and risks involved. The easier it becomes to buy crypto coins, the higher the chances of fluctuations. The prices of crypto coins are likely to inflate when it becomes so easy to buy digital coins such as Litecoin or Bitcoin as seen in the graph below.

After BitPanda introduced and integrated with Litecoin in April, its purchase activities proliferated, making it trend within a short period of time. Many buyers flooded to Litecoin since its price had almost reached EUR 50, multiplying by two times in a span of 14 days. The daily purchase limit of BitPanda for Litecoin rose to EUR 10,000 and it continued to increase every day as seen in the graph below

Even though fintech regulations aim at reducing risks, some crypto currencies risks are inevitable. Worst of all, some of the risks hold volatility and as a result, many investors prefer purchasing coins that are not so popular.

6. Trading Fees

Fintech regulations have also touched on trading fees. Some popular exchanges such as Kraken have a high rate of trading fees. The exchanges has also had problems with commission and trading fees, besides the available sell and buy leverage as seen in the table below.

A result, this has taken a bite off the profits. In return, this has made it difficult to get a fiat on-ramp because of the high costs of transaction fees.

At the end of the day, even though fiat exchanges to crypto currencies are a great option for financial freedom and easy for international transactions, money launderers have no option other than abiding to the rules and regulations. Nevertheless, some of the fintech regulations have made getting fiat on-ramp a pain in the neck. Even though some crypto coins such as Bitcoin are not the same as other commodities since they are digital commodities, limiting their purchase amongst other regulations has made it difficult for fiat on-ramp.

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