With the recent surge in cryptocurrency markets, driven by factors like increased ETF net inflows, there has been a renewed interest in digital assets as many investors are eager to get involved.

For many, the first step in this journey involves "on-ramping" — the process of converting traditional currency into cryptocurrency. This article explores the on-ramping options available to Singapore residents and provides strategies to make informed investment decisions in the evolving crypto space.

What is On-Ramping?

On-ramping refers to the process of converting traditional money into cryptocurrency. This step is crucial for new investors looking to enter the digital asset market. There are two primary methods for on-ramping: using debit or credit cards, and bank transfers.

Debit or Credit Card: Convenience at a Cost

Using a debit or credit card for cryptocurrency purchases is appealing due to its convenience. Many platforms support card payments, allowing users to quickly and easily convert their funds into digital assets. However, this convenience comes with higher fees, typically ranging from 1% to 3.54%, and lower transaction limits compared to bank transfers.

Here is a summary of fees for some popular platforms that support card payments:

Fees (For Buying)

1. Crypto.com - Charges 3.99% transaction fee plus the network fee (subject to the network chosen)

2. Mercuryo - 3.95%

3. Moonpay - 4.5% OR Minimum of €3.99/ £3.99/ $3.99 or the currency equivalent

   
   

Fees (For Selling)

1. Crypto.com - Charges 3.99% transaction fee plus the network fee (subject to the network chosen)

2. Mercuryo - 2.95%

3. Moonpay - 1% OR Minimum of €3.99/ £3.99/ $3.99 or the currency equivalent

While card payments are suitable for smaller transactions, they may not be ideal for larger investments due to these higher fees and lower limits.

Bank Transfer: Cost-Effective and Secure

Bank transfers offer a more conventional and cost-effective method for on-ramping. This approach involves linking a bank account to a cryptocurrency exchange, allowing for secure transfers with minimal fees. For larger transactions, bank transfers are generally preferred due to their higher limits and lower costs.

Here is a summary of fees for some popular platforms that support bank transfers:

Fees (Transfer In)

1. Crypto.com - Free

2. Gemini - Free

3. StraitsX - 0.05% OR Minimum Fee of 5 USD

   
   

Fees (Transfer Out)

1. Crypto.com - Free

2. Gemini - Free

3. StraitsX - 0.1% OR Minimum Fee of 40 USD

Bank transfers are recommended for their cost savings and larger transaction limits, aligning with prudent long-term financial strategies. However, please be aware that some banks may impose additional fees for transactions. It is advisable to check with your bank for any applicable charges.

Conclusion

Navigating the on-ramping process in the cryptocurrency market can be challenging, but understanding your options is key. If you prioritise convenience, using debit or credit cards to on-ramp into cryptocurrency is a viable option despite the higher fees. This method is quick and easy, making it ideal for smaller transactions or those who value immediate access. On the other hand, if you're seeking a more cost-effective solution, bank transfers are the preferred method. They offer lower fees and higher transaction limits, making them suitable for larger investments.

Since investing effectively requires not only maximising returns (i.e. choosing the right assets) but it also involves minimising associated costs (i.e. transaction fees). One might argue that utilising debit or credit cards for on-ramping can significantly diminish returns due to the higher fees involved. Therefore, opting for bank transfers, despite requiring a few additional minutes, is more favourable. After all, this method helps preserve more of the investment gains by minimising unnecessary expenses.

Disclaimer: This article is meant for educational purposes only and should not be considered as financial advice. Always do your own research and consult with a professional before making any investment decisions.