In this guide, we are focusing on Coinbase fees. We will consider the fees charged when using Coinbase’s most popular products so you can discover what to expect from the platform when it comes to costs.
What is Coinbase?
The renowned U.S. company had over 6.1 million monthly active users in the first quarter of 2021; at present, it handles more than 56 million clients worldwide and more than 1,700 institutions and is considered one of the most accessible platforms to buy and sell bitcoin. The exchange has more than $223 billion of assets under management, and, in Q1 of 2021, it processed more than $335 billion worth of trades. Coinbase features three core products: Coinbase crypto brokerage services, a professional trading platform named Coinbase Pro, and a recently-rolled-out Coinbase Prime for institutions. All three platforms are separate. For frequent crypto traders, you can quickly transfer to Coinbase Pro, where you can trade between a wider variety of cryptos. Coinbase Prime is designed with institutions in mind as they require access to deep liquidity pools. Finally, Coinbase’s user-friendly consumer platform is simply for buying and selling well-known cryptocurrencies. Crypto beginners’ corner:
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Introduction to Coinbase fees
Trading on Coinbase’s standard platform is relatively high in comparison to its competitors. However, those who are new to crypto and are looking for convenience and user-friendliness may opt to overlook this. The digital crypto brokerage also has a complex fee system that is expensive if you are not using Coinbase Pro. The reason fees and pricing are not transparent is that the exchange offers several variant products and services to its customers, and each has its own custom pricing model.
Coinbase fees explained
Trading fees
As stated earlier, Coinbase charges varying prices depending on the payment method and the user’s location, including a “Coinbase Fee” in addition to the spread and the cost of depositing money. This fee is contingent upon the value of the acquisition, payment type (debit/credit), and region where you make the purchase. As a result, the service charges relatively high fees when compared to other exchanges. Nevertheless, Coinbase allows transactions in many different currencies and permits a range of payment methods. Charges vary from $0.99 for transactions below $10 to $2.99 for transactions under $200 or an equivalent in any other currency. In addition, Coinbase charges variable spreads on purchases and trades. The broker states that they typically charge about 0.50% to purchase and sell cryptocurrency below $10,000 in value.
Coinbase Pro Fees
Coinbase Pro fees are more economical and less complicated than the standard Coinbase platform. With Coinbase Pro, digital assets and ACH transfers (bank-to-bank money transfers processed through the Automated Clearing House Network) are free to deposit and withdraw, while wire transfers are $10 to deposit and $25 to withdraw. Transactions above $200 Coinbase will charge a percentage fee of 1.49% for standard payment methods and 3.99% for card payments. Some important figures:
For crypto conversions, Coinbase charges up to 2% in spread margins; Crypto transfers are free between Coinbase accounts; External transfers attract a network fee; PayPal fees are 2.5%.
Coinbase Prime fees
Coinbase Prime brokerage offers services for institutional customers with a unit that ties together custody, trading, data analytics, and other amenities. You can store and trade your crypto coins on the Coinbase Prime service for free. The vendor will then deduct a monthly fee based on the number of trades that occurred. The Market Maker Program enables clients who provide large amounts of additional liquidity benefits, including lower fees that are more competitive than Coinbase’s standard rates. Coinbase Prime charges a maker fee for each maker order and a taker fee for each taker order posted to the order book. The fee is in the quote asset, and Coinbase Primes calculates it as a percentage of the order quantity. The trader’s available balance gets charged by debiting a fee for the cost when the client places the order. Fees Schedule as of June 1, 2021
Wallet Service
Coinbase offers their USD Wallet and hosted Cryptocurrency wallet service free of charge for customers to store their USD and cryptocurrency at no cost. In addition, transferring crypto from one Coinbase wallet to another does not incur a charge. Since Coinbase incurs and pays network transaction fees, such as miner’s fees, for transactions on cryptocurrency networks, they will charge consumers a fee based on their estimation of the network transaction they anticipate for each purchase. The company will reveal all transactions at the time of order.
Cryptocurrency transactions
The exchange rate for cryptocurrency transactions is established by adding a margin or spread to the market exchange rate on Coinbase Pro. In addition, separate fees (including the spread) that are either a flat fee or a percentage of the transaction called the “Coinbase Fee” may also be charged. However, Coinbase state that they will always notify customers of all Coinbase Fees (excluding the margin) in addition to any other service fees that apply to each transaction immediately before each transaction is confirmed.
Buy/Sell Transactions
Coinbase charges a spread of about (0.50%) for cryptocurrency purchases and cryptocurrency sales. Market fluctuations in the cryptocurrency price on Coinbase Pro when it quotes the price and when one executes the order may mean the spread may be greater or lesser than initially displayed. The Coinbase Fee (including the spread) is the higher of either the flat fee or the variable percentage fee determined by region, product facet, and payment method. In some cases, Coinbase may charge an additional fee on transfers to and from bank accounts. Simplified buying $100 of bitcoin in the United States through a U.S. bank account or USD Wallet on the platform, the corresponding fiat would be $2.99. The variable percentage would be 1.49% of $100 or, in dollars, $1.49. Since the fiat fee in the example is greater than the variable, the total transaction would be $2.99. Bear in mind that variable percentage fees do not apply to cryptocurrency conversions. The Coinbase fee will always be greater between the minimum flat fee or the variable fee. Below is the breakdown of the flat fees:
Margin borrow interest rate
In early 2020 Coinbase introduced the margin trading feature that gives traders up to 3x leverage, which is sufficient for beginner investors. The fee for margin trading on Coinbase is a fixed, annualized interest rate of 8% for both open and filled orders. On Coinbase, there is an 8% annualized interest rate on the amount you borrow. However, interest is only charged for hours in which you use margin. The amount you have available to buy collateral assets with United States Dollar USD, for example, on bitcoin BTC-USD, is based on the collateral assets currently in your account. Margin Trading information, including your Margin Score, is available for you to see in your Coinbase Pro account. The Margin Score represents one’s ratio of collateral assets to liabilities, which measures how collateralized one’s liabilities are. The Margin Score also shows the health of your margin account, and it is crucial as it will warn you if you are approaching a Margin Call, which is the threshold for forthcoming risk of liquidation.
Requirements for Margin trading
Although margin trading is available to both individual and institutional traders, there are eligibility and collateral requirements. Individuals must live in one of the 23 states where Coinbase currently offers the feature to qualify, have a valid Coinbase Pro account, and be active on Coinbase Pro, measured by recent trades, balances, and deposit and withdrawal activity. Institutional customers seeking to access margin trading must live in one of the 43 states or nine international countries where they currently offer margin for institutions.
Final thoughts
When Coinbase first launched back in 2012, there was little competition, with the most significant competitor at the time being the MtGox bitcoin exchange. Very few participants had entered the market, leaving consumers with limited options for purchasing bitcoin or other cryptocurrencies. Nowadays, crypto exchanges are bountiful, as are how you can buy virtual assets. Despite the volatile nature of digital assets, Coinbase has not only survived as an exchange but solidified its position as one of the leading, reliable and safest exchanges. Coinbase’s compliance, security, reliability, and deep liquidity mean that traders can feel confident that they can execute even the most sophisticated portfolio strategies. Coinbase could be a good option for new crypto investors who may lack experience buying and selling cryptocurrencies. The standard platform features, such as its learning program and the ability to quickly set up a recurring purchase, provide the unseasoned with a clear path to investing, understanding cryptocurrency, and trading. Traders with more experience will find that Coinbase Pro is a cheaper and more robust option. Overall, Coinbase has designed the platform with an easy-to-use interface with the beginner in mind to invest and trade. [coinbase]
