US exchange Coinbase is increasing the trading fees at its Pro venue, and crypto traders are up in arms.
In a Medium post yesterday, the leading regulated exchange announced that its maker and taker fees will be rising from 7 October, with small traders taking the brunt of the pain in what Coinbase unwisely describes as a move to “slightly increase fees for lower-volume customers”.
The timing of the move is unfortunate from a public relations standpoint, following as it does the removal of commission fees on US equities and exchange traded funds by US broker Charles Schwab.
E*Trade, another top-four broker in the US, has followed Schwab’s lead and similarly reduced fees to zero.
In its infinite wisdom Coinbase has decided to move in the opposite direction.
Here’s the new schedule, with the old fees in red. The increases are eye-watering.
Trades at $10k and under see maker fees increase by 233%, from 0.15% to 0.50%.
Taker fees for the same tier double from 0.25% to 0.50%.
Whales to benefit from fee cuts
Meanwhile, at the other end of the scale, those placing trades between $50k and $100 million will see no increase.
Whales with $100 million or more to play with will see decreases (that’s right) ranging from -13% to -20%.
Coinbase is a favourite with consumers because of its relatively easy and fast fiat deposit and withdrawal system because of its status as a licensed e-money operator.
Many new customers to Coinbase do not realise that their account provides automatic access to the Coinbase Pro exchange and its lower fees compared to the consumer-facing exchange.
Most professional and experienced traders have eschewed using the Coinbase consumer site because of its high fees and instead trade on Coinbase Pro or, increasingly, look elsewhere.
It remains to be seen whether users of Coinbase Pro will stick around to pay the higher fees, given competition from other regulated exchanges such as Kraken where fees are much more competitive.
Kraken fees schedule:
| 0 – $50,000 | 0.16% | 0.26% |
| $50,001 – $100,000 | 0.14% | 0.24% |
| $100,001 – $250,000 | 0.12% | 0.22% |
| $250,001 – $500,000 | 0.10% | 0.20% |
Outrage from crypto traders
The comments on the Coinbase Pro post are unanimously hostile to the fee hike by Coinbase.
For a flavour of the building negative reaction, a poster called Jack says: “Well, that sucks for the little guy. Why would they increase prices during a time where everything going down? I guess I’ll use coinbase even less now. If you want to increase trading, lower the fees. This is a dumb change.”
As you might expect, the response on Reddit is less polite.
heresjoNNy130 is headed over to Kraken: “Meanwhile stock brokerages are all going fee free. I emailed support blasting them. If they don’t change, I’m going to Kraken”.
Coinbase pays interest on USDC but takes it back in fees
Earlier in the week Coinbase announced that it would pay 1.25% interest on USDC stablecoin holdings, but seems to be taking all of that back, and more, with this price gouging of its customers, severely testing their loyalty.
No doubt Coinbase is reacting to internal pressures as it seeks to weather the downturn in trading volumes during the height of the bear market.
Nevertheless, the unfairness of squeezing the small people and rewarding the whales will not endear it to the crypto community.
Also, there is no incentive to put liquidity on the exchange (maker) with these fees until you hit the $50k and above tiers.
And it’s not just Kraken that will be rubbing its hands with glee.
Binance is planning to enter the US market and will have noted that its main competitor has just effectively told small traders that it doesn’t really want their business.