Costs of Buying Crypto from Fiat Currency

TLDR: wire transfer for big $, credit/debit for small $

7 min readJun 13, 2021


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Theres a lot of surface level tutorials on how to buy crypto but I just can’t find an in depth overview of all the potentials paths from fiat to crypto and their costs. Thus I’ve been digging in deep and thought I should share my findings. Here they are!

This is for readers of intermediate and above understanding of blockchain and crypto.


  1. buying small amounts of crypto: direct credit & debit is better since the 1~5% cost is not much
  2. buying large amounts of crypto: use a custody exchange and pay the flat wiring fee.
  3. First time users should use the coin holding companies like coinbase, kraken, binance, etc.

Note on US exchanges:

most US exchanges have higher slippage and fees than global exchanges. For example binance global tends to perform better than Additionally, FTX, one of the premier exchanges is not available in the US. If you have international residence, try to use your non-US government ID for KYC and use a foreign bank some sites track the IP address to determine what country you reside in so you may need a VPN to have an IP in the country of your foreign citizenship. Be very careful as you will face consequences if your odd behavior is suspected for criminal behavior.

The SEC regulations are hiking up prices. Additionally the US exchanges must repost to the SEC and supposedly many crypto places often misreport, but I can’t seem to find sources hardly backing this up. But I guess it’s good to keep in mind.

Note on gas fees:

Most transactions (except for transactions fully on Binance Smart Chain and other Finance native chains) incur gas fees that are needed for a miner(in a PoW blockchain) or validators (in a PoS blockchain) to include your transaction in the next proposed block. Gas fees really matter upon the congestion of traffic on the blockchain and can be volatile, so it won’t be covered here. You can look up gas fees and tell that it will be high if there is some even causing a lot of people to transact on the chain you are using, or low if not many people are using the chain.

1. Debit / Credit Card — Kucoin, Gemini

If you want to buy via credit or debit, most large exchanges use Simplex or Banxa protocol to allow you to buy crypto. By “no fees” they mean “no fees that we added on, but you still have to pay the protocol (banxa or simplex) fees”. Both charge a percent of the cost, so If you are making a large purchase, You should not go this route.

Simplex Charges:

Banxa charges:

If you see the Simplex or Banxa logo, you are paying their fees, no matter what app you are using. Even changeNOW that claims to charge no fees, so beware before you hit that submit button!

2. Custodial — ex: Kraken, Coinbase

Another option to on-ramp is to send in your fiat money into a custodial account where they will hold your money in return for using the money within the company’s system to buy / sell crypto.

Here the fees are from transferring from your fiat bank to your crypto bank. These fees depend on how much your bank charges you for wires since different banks have different policies for wiring. For example, here are the fees for Bank of America (Note: check the operating times as in-person services times are not in-sync with online data due to covid rules and changes):

Since most crypto banks don’t support ACH transfers, the most expensive $30 will be the charge for the case of Bank of America. This means you want to try and send all the money at once as much as possible instead of sending them in bit by bit.

Additionally some banks may cap the total amount that you can wire. Thus you will most likely have to go to the bank in person to explain your situation and get the wire through.

Note that transfers of crypto or fiat currency is not a taxable event, but a transaction between one asset and another (whether you are buying crypto or selling out crypto) is a taxable event. However, every transaction incurs a gas fee so try to minimize the total amount of transactions you make unless you are a whale.

Here are the kraken fees (0–0.26%)for reference:

Note if you plan on moving around your crypto, there is usually a small ~$2 dollar fee from withdrawing from some places like kraken so be ware!

3. Buy via fiat Fianancial Institutions (like RobbinHood or eTrade)

This option only costs the transaction fees that the institution charges so this is great in terms of avoiding costs. However these institutions are much more conservative so will only list coins after they have become popular, not before. Thus you can only really buy outdated technology like ETH and BTC with hopefully a few exceptions to come, and can’t really buy into a technology before it booms.


Every on-ramping methods boil down to the above two methods. The only difference it the UI/UX that the company uses to connect the Simplex/Banxa API or how they wire it to their custodial bank account.

As we can see, there really is no free way to onramp. The ideal situation would be to get payed in crypto to avoid having to onramp and pay any associated fees. Hopefully you now know more about the state of fiat to crypto on-ramping as of 6/13/2021.

Side note — Swapping

If you already have some cryptocurrency and want to swap tokens (such as USDC to KSM in the example below) Try making an account in a well-respected exchange, send the tokens to your wallet in that exchange, then swap there. The fees are much more reasonable and you don’t have to bother buying ETH just to pay gas fees like with this website!

Side Note — First Time Users:

Read this before starting with a hardware wallet:

Hardware wallets allow you to hold the private keys to your coins, meaning you truly have ownership of your tokens, where as using a listed exchange or online wallet means you just have the right to the tokens, much like how current fiat currencies like the dollar are guarantees by the government of the worth of the paper currency. Although it feels good to own one’s money, buying from Ledger or Tezos uses Coinify which is similar to simplex/banxa in charging % fees on credit or debit. Thus you cant directly buy crypto into a hardware wallet with a flat fee directly. If you want to pay a flat fee, you have to transfer your money to the crypto company bank account (paying the wiring fee), then send the crypto to your hardware wallet (which will cost gas price which will be $1~$100+ on ETH based ERC20 tokens). Then, it’s just cheaper to take the % cut from the direct credit/debit buy.

So, if it’s your first time and you are using a high-gas cost blockchain system cryptocurrency like any ERC20 token, then you are best off starting off by making an account in some trusted coin listing company like coinbase, kraken, or binance (really depends on your country of residence’s laws and regulatory bodies), then directly buying from there with the deposited fiat money like dollars, and the staking or doing whatever you want!

Additionally, if you ever want to off-ramp (sell crypto for fiat currency like dollars) then you will either have to use some website that hosts buyers, or go through a listing company to sell your coins anyways. Thus crypto becomes much more liquid in using a listing company instead of a hardware wallet.

Side note — ACH and plasma

Interestingly, the ACH is a network of banks that agree to work together where an off-line ledger is kept to keep the transactions between two financial entities and the ledger is later sent as a batch transfer between the two institutions. The actual money goes between the two organizations via the ACH network, not directly between the two as with wire transfers. This saves costs since the two communicating institutions don’t have to pay for transfer costs by doing only 1 by 1 costs. This is why ACH transfers cost less than wire. However the banks need to wait for a certain amount of ACH transfers to be requested before sending them in a batch. Thus ACH is slower than wire.

This sounds a lot like the plasma network on Etherium! plasma also has an offline ledger that keeps track of the pending transactions between nodes, and uses the actual network to transfer the tokens. Later, the off-line ledger is sent to complete a batch transfer as well.

Learning about fiat systems can transfer into better understandings of the crypto world.

Leave some claps if you learned something cool!




UC Berkeley Student. Loves working out, system design, making eggs, and learning new things!