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Internet payment processor Stripe has launched a fiat-to-crypto onramp to tackle the "cold start problem" encountered by Web3 companies due to customers lacking “crypto in their wallets for transactions.”
As stated in a May 4 announcement, Stripe’s newly introduced fiat-to-crypto onramp – which will be managed by Stripe itself – will allow Web3 companies to offer US-based customers the capability to acquire crypto "at the exact moment they require it," without the necessity of embedding any code into a website or application.
Guillaume Poncin, head of engineering for crypto at Stripe, mentioned that Stripe will manage compliance-related responsibilities for Web3 companies utilizing the onramp – including conversion and authorization optimization, identity verification, and fraud prevention – to assist "customers in quickly and securely accessing Web3 services."
It was noted that integrated tools for fraud detection and identity verification have been established to aid companies in fulfilling Know Your Customer (KYC) and compliance obligations.
We’re introducing a Stripe-hosted fiat-to-crypto onramp (no code required) and unlocking the waitlist for the embeddable onramp. https://t.co/U9OW2cjFrZ pic.twitter.com/jjmkDUiOqc
— Stripe (@stripe) May 4, 2023
It was emphasized that Web3 companies frequently encounter obstacles from customers who do not have crypto in their wallets when attempting to provide crypto and blockchain services. It noted:
“Companies interested in offering cryptocurrency and blockchain-enabled experiences often face a cold start problem: Their customers don't have the crypto in their wallets to carry out transactions”
Stripe’s hosted onramp has been adopted by various Web3 companies, including the privacy-centric browser Brave, decentralized finance (DeFi) protocol 1inch, and blockchain protocol Lens Protocol.
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James Mudgett, vice president of Web3 products at Brave, stated that the service will enable the platform to “reach new Web3 users.”
Meanwhile, Sergei Kunz, co-founder at 1inch, underscored the significance of creating “bridges between Web2 and Web3,” adding that Stripe’s expertise with Web3 companies positions them "well to assist."
Related:Crypto-friendly Stripe weighs public offering: Report
In a conversation with Cointelegraph, Ohm Shah, co-founder of Wallet Guard, remarked that Stripe’s new offering could “facilitate many individuals in easily entering Web3.”
However, Shah emphasized the necessity of performing due diligence prior to acquiring digital assets, even when a reputable brand is facilitating the onramp for purchasing crypto. He noted:
“While on-ramping with Stripe to buy your very first NFT can be thrilling, it’s crucial to consider how easily you can lose your assets, as it only takes one malicious signature.”
This follows the announcement by mobile payments service Venmo regarding its own fiat-to-crypto payment service on April 28.
During an interview at Consensus 2023, PayPal executive Jose Fernandez da Ponte stated that starting in May, the company will be “enabling on-chain transfers from Venmo wallets.”
Robinhood also revealed its own fiat-to-crypto on-ramp – Robinhood Connect – at Consensus 2023, allowing users to directly buy and sell cryptocurrency using a credit or debit card, either in their self-custody wallet or natively in DApps.
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