Why Blacksheep is the Future of Crypto On/Off Ramps

Most start-ups are born from the desire to solve a problem to benefit society, or fill a commercial gap and profit from it, or a subject matter expert commercialising some intellectual property.

Blacksheep was born from one thing – sheer frustration.

This frustration was not only from myself but also from the clients and broader crypto industry that I work with deeply as a lawyer and advisor.   

The origins of our frustration

We have firsthand experience with financial institutions restricting our access to crypto assets. Banks have approved chargebacks on P2P trades despite valid transactions, declined legitimate transfers to exchanges (even after we confirmed we are crypto-savvy), and arbitrarily frozen our accounts. 

In late 2023, I had a call with a major bank in Australia. I wanted to test the new $10,000 AUD monthly limit. I transferred $10,001 to a known crypto exchange (the PayID has “coin” in the name). My account was immediately locked until I called the scam line.

The man on the phone asked what I was investing in. When I explained I was purchasing USDT and proceeded to explain what USDT was (USD stablecoin backed by cash and cash equivalent reserves), they acknowledged my understanding. I passed the test, so surely the transaction could be processed?

No.

I was informed that I could not transfer my $10,001 to the exchange. This is despite passing their knowledge test, and being a leading crypto lawyer in Australia (which I did point out to them).

“No exceptions” was the only response.  

Maybe for some consumers, this hard-line approach keeps them safe. Maybe for a lot of them. But certainly not for me, it simply limited my financial freedom under the guise of protection, and I was sick of it.

The Fiat-Crypto Problem

Blacksheep seeks to solve the Fiat-Crypto Problem. We define the Fiat-Crypto Problem as,

It is difficult for users with fiat currency to access products that require or are digital currency and to convert those products back into fiat.

This problem is particularly significant in Australia due to restrictive banking policies, but also is prominent in many countries across the world.

However, not all countries have the Fiat-Crypto Problem, especially developing countries, where crypto is used in place of payment rails common in Australia such as card, bank transfers, and even cash.

The Fiat-Crypto Problem stems from factors, such as:

• Banking industry’s perception of crypto as a threat.

• Potential for scams on customers.

• Retail and wholesale customer risk controls in banks.

• Government anti-crypto stance.

• Anti-money laundering and Counter Terrorism Financing (AMLCTF) requirements.

• Cost of moving funds (often exceeding 5%).

Our hypothesis is that by providing easier access to digital assets from fiat markets, we can capture significant inflows into the crypto industry through trusted rails, and help to reduce the factors that contribute to the Fiat-Crypto Problem.

This is likely a direct revenue opportunity which should persist for the next decade. We further hypothesize that while banks and brokers may incorporate crypto products into trading platforms, they will not integrate the full benefits of DeFi and decentralisation generally to their customers as they are inherently centralised custodians. Centralised custodian businesses will always seek to hold customer assets as they have traditionally done—”for your protection.”

Blacksheep aims to provide a centralised service to proliferate access to decentralised activity, generate wealth, or reduce it – that is what freedom looks like. We don’t wish to hold customer funds on our platform where possible, and promote self-custody of crypto assets and access to DeFi markets and liquidity.

Current onramps do not provide customer centric products with enough breadth.

Blacksheep intends to provide a multi-product solution which:

• Allows users access with the least invasive KYC possible.

• Across as many countries as possible.

• In as many currencies as possible.

• At the lowest spread and fees possible.  

The multi-product solution

A centralised solution is most appropriate as Blacksheep can act as a passthrough business only in terms of crypto assets. We have multiple products planned, the plan will change depending on industry needs, and needs in each jurisdiction.

• P2P Trade Maker - We buy and sell multiple cryptocurrencies on P2P platforms like BitGet, Binance P2P, LocalCoinSwap and more.

• Direct to Wallet - We offer a method for users to supply fiat, and receive crypto into their nominated wallet. Currently in development for launch November 2024.  

• Whitelabel Ramp – The Direct to Wallet product also allows for a white-labelled exchange onramp product, and integrating into any business requiring crypto rails.

• DeFi Integration - We are developing a DeFi integration to allow users to go from fiat directly into any token they want i.e. dog wif hat ($WIF). This will be via DEX’s, many of which allow for gas optimised routes

• OTC Desk Rails – We will provide API’s for OTC desks to use our multi-currency rails, we are not offering OTC directly to customers.

• Onsite widget/iFrame - Enables on/offramping any user from fiat into their native token, or to onramp into stables or large cap tokens to use their platform.

• Gasless payments between Blacksheep users - Payments can be made between users at zero cost. Requires an NCP authorisation on an AFSL.

Further products will be identified as the industry changes, and products will be sunsetted when no longer necessary.

Australia is the initial market for many of these products. Although our rails can support many other currencies, we take a cautious approach to new markets.

Approach to licensing and registrations

Blacksheep currently is a registered Digital Currency Exchange in Australia, meaning we report to AUSTRAC and have requirements under the AMLCTF Act in Australia. We will likely obtain an Australian Financial Services License (AFSL) in due course, once the products require it.

Foreign registrations and licences will be obtained as necessary. We will expand to the countries where we can solve the Fiat-Crypto Problem with the greatest effect.  

Approach to banks

Traditional banks are major players in this space. We understand the perception of crypto assets by banks and risk departments, and attitudes are changing.

We intend to take a highly collaborative approach with banks when they are ready. We are happy to share information, prevent scam risks to our customers, educate their risk departments, and form partnerships to solve the Fiat-Crypto Problem. This is in the best interest of all customers.

We expect this will take a long time. Though as a centralised on/offramp, if we can build trust with the banking sector we can also connect more crypto exchanges and businesses to those banks with less friction by white-labelling our systems.

Where to from here?

The Direct to Wallet product is our core focus in late 2024 and we expect to launch a beta version soon.

Disclaimer: This information is provided by Blacksheep Operations Pty Ltd ABN 16 674 111 392 for general informational purposes only and may refer to products not available in your location. It does not constitute (i) investment advice or a recommendation to invest; (ii) an invitation or solicitation to buy, sell, or hold digital assets; or (iii) financial, legal, accounting, or tax advice. Digital assets, including stablecoins and NFTs, are highly volatile and carry significant risks. You should carefully assess your financial situation before deciding whether to trade or hold such assets. For advice specific to your circumstances, please consult your legal, tax, or investment adviser. All data and statistics are provided solely for general information. Blacksheep Operations accepts no responsibility or liability for any errors or omissions in this information, nor for any use of or reliance upon it by others.