Less of a Funnel, More of a Freeway: Rethinking Fiat-Crypto Conduits

Less of a Funnel, More of a Freeway: Rethinking Fiat-Crypto Conduits

By Adam Bialy, Founder & CEO of Fiat Republic

Bridges and highways. In the physical world, they streamline the movement of goods, people, and ideas, making geographical distances less important. In the financial world, these bridges facilitate the flow of money and data between traditional banking and crypto worlds . I have previously covered the critical role of establishing secure bridges to banks from crypto platforms. Today, I’d like to focus on broadening this perspective – rethinking our strategy from building simple bridges to constructing freeways.

The banking sector faces a hidden opportunity, which, incidentally, they also perceive as a challenge. The challenge is – how to seamlessly integrate a $1.1 trillion crypto market. Yet, the journey to seize this opportunity feels similar to pouring water down a narrow funnel – hindered with delay, suspicion, and significant uncertainty. We live in an age where fast, secure, and transparent transactions are expected, not as a luxury, but as a standard. The current ‘funnel’ model is a bottleneck in bridging fiat and crypto spheres, and hence, we should reevaluate our approach.

Imagine a freeway – a smooth, multi-lane, bidirectional flow of fiat-to-crypto transactions. This freeway will not only enhance transaction speeds but also offer additional benefits like expanded range of transaction methods and better alignment with user preferences. More importantly, it will offer the visibility necessary for regulatory compliance. In this context, freeways become more than just avenues for increased transactional traffic. They provide transparency – alleviating the ‘fear of the unknown’ that is prevalent in the traditional banking sector when interacting with crypto.

To navigate this lack of visibility, banks often find themselves in a cumbersome cycle of request for information (RFIs), manual compliance checks, payment suspensions, and even ‘debanking’. To break free from this cycle and foster trust in the fiat-crypto freeway, a systemic approach is necessary – a gold-standard bridge that integrates Know Your Customer (KYC) requirements, robust transaction monitoring, and harmonized compliance protocols.

A freeway model delivers exactly against these attributes. It promotes a seamless onboarding process, with every participant in the network regulated either as virtual asset service providers (VASPs) under the current MLD5 regime, crypto asset service providers (CASPs) under the upcoming MiCAR or as e-money institutions (EMIs) or Payment Institutions (PIs). Enabling a systemic reliance model assures banks that they’re not just following the money, but also the flow of trust – both on-chain and off-chain.

As a key player in the Web 2.5 sphere, we at Fiat Republic are pioneering the shift from the funnel model to the freeway model; by combining the transaction monitoring capabilities for both fiat and crypto transactions, we’re offering an unprecedented level of transparency. Simultaneously, we’re maintaining the delicate balance between privacy and safety – a golden bridge that banks can trust.

In building this freeway, we aren’t just easing the passage of wealth from fiat to crypto. We’re bridging two worlds, paving the way for mass adoption of crypto, and forging a path towards a more inclusive, transparent, and efficient financial future. So, let’s not limit ourselves to bridges. Let’s build freeways – where trust, opportunity, and innovation can speed freely into the future.