Photographer: Jaap Arriens/NurPhoto/Getty Images
Misyrlena Egkolfopoulou
Yueqi Yang
Crypto’s most ardent supporters present it as the future alternative to regular money. What they sometimes fail to mention is that, for now, most digital currencies still rely on old-fashioned banks for their existence. The need for “on and off ramps” for converting crypto into traditional currencies and back, and the risks this creates, were on display in March when two crypto-friendly US banks collapsed. And a major stablecoin briefly lost its peg to the US dollar after its reserves were stuck at a failed bank. The collapses make it harder for investors to funnel cash into digital assets, and raise a question: Is mainstream banking’s brief affair with unconventional finance already over?
An on-ramp is somewhere you can exchange regular currencies such as US dollars or euros for cryptocurrencies such as Bitcoin or Ether. Off-ramps let you swap crypto assets for traditional money. This mostly happens on crypto exchanges such as COINBASE and Kraken as they can accept money through bank transfers or credit card payments. It’s possible to trade crypto tokens “peer to peer,” without using a regular bank, but as very few products or services can be bought with digital currency, investors usually need to off-ramp before the proceeds can be spent.
