Entry of Tradfi Institutions Can Help Reshape User Perceptions Towards Crypto — Sami Start

In his written responses to questions from Bitcoin.com News, Start also stated that the development and implementation of viable regulatory frameworks will be “crucial for the maturation of the crypto market.” He added that such frameworks could provide “a structured and secure environment for investors, reducing the perception of crypto as an unregulated and risky investment.”

Meanwhile, the co-founder of Transak has urged Web3 companies to comply with regulations, even if this results in higher operational costs. According to Start, this ensures the success of Web3 companies without them having to sacrifice “the ethos of accessibility and openness that defines the Web3 space.”

Turning to Web3 games, which have seemingly failed to live up to the hype so far, Start said the key to “widespread adoption of Web3 gaming” lies in the ability of industry participants to work together. He argued that when all industry players collaborate to make Web3 gaming accessible and appealing, it will in turn increase the prospect of “a more engaging, rewarding, and immersive gaming experience.”

In his responses delivered via Telegram, Start also expressed his views on how Web3 platforms can simplify their onboarding experiences for users with varying levels of understanding. Below are all of Start’s responses to the questions posed.

SS: There is a huge range of features for wallets: hot/cold, multi-sig, custodial/non-custodial, hybrid, hardware wallets, browser wallets, mobile wallets, MPC, account abstraction, etc. etc.

Every option has its pros and cons and can be optimal in some scenarios, and can be totally inappropriate in others. For example, if you are playing a game that is aimed at web2 people with no blockchain knowledge, and the users want to buy a $2 NFT, then it makes sense to offer a custodial or hybrid wallet option that optimizes for ease of use, rather than for decentralization or security.

However, if you are investing your life savings into a blockchain financial product, then it can make sense to consider hardware wallets, multi-sig or MPC, insured custody and other features that optimize for security and self-sovereignty (but make sacrifices on the ease of use).

It’s also worth noting that a user can get started with a quick and easy option, and then migrate to more secure options as they get more advanced and the stakes become higher.

SS: Transak basically sells crypto to users, inside the convenience of a blockchain application. This allows the user to get started with using the blockchain app without having to leave and use a 3rd party exchange and deal with other complexities. We also offer off-ramp (crypto-to-fiat), non-fungible token (NFT) Checkout, and Transak One (fiat to any smart contract protocol).

The use cases for this are varied and also change over time. Some of our customers are:
Wallets, such as Metamask and Trust Wallet, allow their users to press a “Buy Crypto” or “Top up” button, which takes the user to Transak. Games and gaming infrastructure such as Decentraland and Immutable X use Transak to allow users to buy in-game currency in NFTs (e.g. a user can buy a sword as an NFT, and then kill a dragon). These games tend to utilize our high conversion and low friction “Light KYC” and card and mobile payment methods.

Finance apps, including defi and real-world assets (RWAs), such as Metawealth, use Transak to allow users to on and off ramp into crypto (mostly stablecoins). They can then enjoy use cases from investing to remittance, and anything else you can think of.
Miscellaneous use cases such as decentralized social networks or anything else where the user needs some in-app crypto to participate.

But Transak is more than just a “buy crypto” widget. It has a powerful developer experience that allows apps to craft a seamless onboarding experience, and handle all of the frontend and backend complexities that come with these payment, compliance, and operational burdens.

SS: The perception of the cryptocurrency sector as a “Wild West” among average Web2 users is understandable, given the turbulence marked by the NFT bubble, the collapse of FTX, and various scams. However, the entry of well-established traditional finance (tradfi) players into the cryptocurrency space and the development of potential regulatory frameworks are significant steps that could indeed help in reshaping this perception and fostering broader acceptance of blockchain as a breakthrough in internet technology that can be the backbone of a new and improved way of building apps.

The involvement of tradfi institutions brings a level of credibility, expertise, and stability to the crypto market that was previously seen as lacking. These institutions not only have a deep understanding of financial systems and risk management but also have reputations to uphold, which means they are likely to approach the crypto market with a level of caution and diligence that can enhance overall trust in the sector.

Furthermore, the development and implementation of regulatory frameworks are crucial for the maturation of the crypto market. Regulation can help mitigate many of the risks associated with investing in cryptocurrencies, such as fraud, market manipulation, and other illicit activities, making the space safer for retail and institutional investors alike. Clear and workable regulations can provide a structured and secure environment for investors, reducing the perception of crypto as an unregulated and risky investment.

Regulatory frameworks also play a critical role in integrating cryptocurrencies into the broader financial ecosystem, enabling more seamless interaction between traditional and digital assets. This integration can facilitate greater liquidity, market stability, and accessibility, further establishing crypto as a serious asset class.

However, it’s important to acknowledge that while the entry of tradfi players and the advent of regulation can contribute significantly to the legitimacy and stability of the crypto market, these factors alone may not be enough to change perceptions overnight. Education and transparency are also key in helping the masses understand the value proposition of cryptocurrencies and blockchain technology, beyond the speculative aspects that have dominated headlines.

The scams, rug pulls, and other types of illicit activities are difficult to understand because they require knowledge of complex and rapidly changing blockchain systems. Many illicit activities resolve to the same types of scams and Ponzi schemes that have occurred for hundreds of years, even without blockchain. But this time they are hidden among confusing technical concepts and jargon. For this reason, it will take many years for regulators and the industry to fully catch up. Until then we can continue to expect some ham-handed regulations that overly suppress innovation as well as missing the critical risks and allowing users and startups to get burned.

SS: Onboarding to web3 gaming has been one of the biggest challenges hindering mainstream user adoption. Recognizing this critical barrier, we launched NFT Checkout and have been collaborating with leading companies like Immutable and Animoca Brands. This integration is crucial for creating a frictionless user experience, where gamers can easily convert fiat to crypto and vice versa without ever leaving the gaming platform. Our goal is to develop and refine on/off-ramping features that pave the way for widespread acceptance and participation in the web3 gaming ecosystem.

A report by Game7 underscores the promising growth trajectory of web3 gaming, projecting significant expansion in the coming years. This anticipated growth is not just numerical but also hints at the evolution of gaming experiences, offering advanced gamification and immersive experiences that leverage the unique capabilities of blockchain technology. Such advancements promise a future where players enjoy unprecedented levels of ownership, transparency, and engagement within their gaming worlds.

However, unlocking this potential requires a concerted effort to dismantle the current barriers to entry. The complexity of blockchain technology, coupled with the unfamiliarity of concepts like NFTs and cryptocurrency for the average gamer, poses a substantial challenge.

As we stand on the brink of this new era in gaming, it’s clear that the path to widespread adoption of web3 gaming lies in our ability to work together. By focusing on user-friendly solutions, fostering collaborations, and continually innovating, we can remove the barriers that currently prevent web3 gaming from reaching its full potential. The promise of a more engaging, rewarding, and immersive gaming experience is within reach, but realizing it demands a collective effort to make web3 gaming accessible and appealing to all.

SS: It’s really important to navigate the evolving landscape of crypto compliance, which is becoming increasingly complex as more countries develop and release their own regulatory frameworks. The industry participants need to actively invest in this area rather than merely reacting to regulatory shifts.

We at Transak, understand that for developers and platforms looking to expand their reach, the prospect of a fragmented regulatory environment can be daunting. It poses significant challenges in maintaining compliance while attempting to onboard users from diverse jurisdictions. We need to take a proactive approach in strategically acquiring licenses and staying abreast of regulatory developments worldwide. That way, we can ensure that we continue to onboard a global user base without the constant worry of regulatory compliance. A proactive approach would enable industry participants to thrive in a regulated world without sacrificing the ethos of accessibility and openness that defines the Web3 space.

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