Coinbase – Introduction
Coinbase is one of the leading cryptocurrency exchanges in the world. It is a US-based cryptocurrency exchange offering a wide range of crypto assets to its customers.
Coinbase offers cryptocurrency buying, selling, trading, staking, and storing services to name a few to its customers.
The company offers these services to individual and corporate customers. Some other services offered by the company include NFT, Crypto cards, trust services, and lending services.
Coinbase is an FDIC-insured company with protection of up to $ 250,000 on USD balances to its customers. It offers around 150 currencies for trading under its conventional trading platform.
The company offers two trading platforms Coinbase and Coinbase Pro. The latter comes with additional features and more trading options for its customers.
The company is renowned for its intuitive trading platform, excellent customer support, and comprehensive range of educational material.
Coinbase Fee Structure – An Overview
One of the drawbacks of Coinbase has been its high trading costs for its customers. The company has high trading and non-trading fees as compared to its competitors.
Spread
Coinbase charges a 0.50% spread on all transactions. It means you’ll incur the 0.50% cost on both the buy and sell transactions.
Transaction Fees
The Coinbase version charges an additional commission on each transaction varying by the transaction amount.
| Transaction Amount | Fee |
| $10 or less | $ 0.99 |
| $ 10 – $25 | $ 1.49 |
| $ 25 – $50 | $ 1.99 |
| $50 – $100 | $ 2.99 |
Transactions above $200 will incur a variable transaction cost depending on the mode of payment.
The fee structure for the Coinbase Pro version is charged by each transaction depending on your position as a “taker” or “maker”.
Here is the fee chart for Coinbase Pro.
Taker fee |
Maker fee | Taker Fee |
| Up to $10K | 0.60% | 0.40% |
| $10K – $50K | 0.40% | 0.25% |
| $50K – $100K | 0.25% | 0.15% |
| $100K – $1M | 0.20% | 0.10% |
| $1M – $10M | 0.18% | 0.08% |
| $10M – $20M | 0.18% | 0.08% |
| $20M – $100M | 0.15% | 0.05% |
| $100M – $300M | 0.1% | 0.02% |
| $300M – $500M | 0.08% | 0.00% |
| $500M+ | 0.05% | 0.00% |
As you can see the Coinbase Pro version has a simple and cheaper fee structure.
Why are Coinbase Fees So High?
Coinbase charges relatively higher trading fees to its customers. There are several reasons behind this.
Let us briefly discuss some of the top reasons for its high-cost fee structure.
- High Buying and Selling Fees
Traders incur buying and selling fees with each side of the transaction. This fee is included on top of the embedded spread for the traders.
Coinbase has a spread of 0.50% on each side of the trade. Also, its trading fees for buying and selling cryptos are very high.
| Transaction Amount | Fee |
| $10 or less | $ 0.99 |
| $ 10 – $25 | $ 1.49 |
| $ 25 – $50 | $ 1.99 |
| $50 – $100 | $ 2.99 |
The best option for you to reduce these costs is to upgrade to the Coinbase Pro version. The Pro version charges significantly lower trading fees as shown above.
- High Funds Withdrawal Fees
Coinbase has a 1% “network charge” for withdrawing funds for its customers.
Unlike other cryptocurrency exchanges, it does not charge a direct withdrawal fee. The network fees cover the conversion and withdrawal.
Coinbase users cannot directly withdraw funds to their bank accounts. They have to convert their cryptocurrency balance to USD using the platform’s account.
The 1% network charge or withdrawal fee is relatively high as compared to other crypto exchanges. Making it a significant reason why Coinbase has a higher overall fee structure.
- Higher Trading Commission
Coinbase has a maker-taker fee model for its trading commissions. The trading fee is lower for a higher trading amount and gets higher for the lower amounts.
Then the trading fee for a maker is higher as compared to a taker.
A maker is the one who places an order and it gets fulfilled immediately. The trading fee of a maker will be applicable in this case. The fee ranges from 0.05% t0 0.60%.
If your trading order is not fulfilled immediately, the order is placed on the order book, and you are considered a taker. The taker fee ranges from 0.0% to 0.40%.
Taker fee |
Maker fee | Taker Fee |
| Up to $10K | 0.60% | 0.40% |
| $10K – $50K | 0.40% | 0.25% |
| $50K – $100K | 0.25% | 0.15% |
| $100K – $1M | 0.20% | 0.10% |
| $1M – $10M | 0.18% | 0.08% |
| $10M – $20M | 0.18% | 0.08% |
| $20M – $100M | 0.15% | 0.05% |
| $100M – $300M | 0.1% | 0.02% |
| $300M – $500M | 0.08% | 0.00% |
| $500M+ | 0.05% | 0.00% |
- Insurance Costs
Another major reason for Coinbase to charge higher trading and non-trading fees is its insurance costs.
The company holds its assets in USD or other fiat currencies as well as crypto assets. The fiat currencies held within the US bank accounts or invested in an FDIC-insured account are protected by the FDIC insurance cover.
However, cryptocurrencies and digital tokens are not protected by FDIC insurance.
Therefore, the company offers additional crime insurance protection for the digital assets held in its wallets. This insurance protects users from theft or criminal acts but unauthorized access.
- Bank Fees
Coinbase customers have to pay additional costs that are external to the platform. These are bank costs that customers pay on different types of transactions including interest charges, currency conversion, and international transaction charges.
| PAYMENT METHOD | FEE |
| U.S. bank account | 1.49 percent |
| Coinbase USD wallet | 1.49 percent |
| Debit card | 3.99 percent |
| Instant card withdrawal | Up to 1.5 percent of any transaction; a minimum fee of $0.55 |
So, if you are making a transaction for funding your account with a debit card, you’ll incur an additional 3.99% as well.
- Brand Reputation + Marketing Costs
Coinbase is an established brand when it comes to cryptocurrency exchanges. So, it can afford to charge a premium fee for its services to its customers.
It simply means that Coinbase enjoys a sense of security and prestige from its customer base. Thus, it offers security, ease of access, and an excellent trading platform by charging premium fees to its customers.
Secondly, Coinbase has to incur a large marketing budget as well to maintain its prestigious brand image.
- Operational Costs
Cryptocurrency mining, storage, and exchange services are not cheaper. The operational costs to maintain these services at the highest quality level are extremely high.
Thus, its high operational and industrial costs are major reasons for Coinbase to charge premium fees to its customers.
How Can You Save on Coinbase Fees?
As we have compared the fee structure of both trading platform versions of the Coinbase, we have seen that trading costs for the Pro version are fairly low.
Thus, if you upgrade to the Pro version and make limited bank conversions, you can significantly save on trading costs with Coinbase.
Reference for Research Work:
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