Coinbase Introduces New Fee Structure for USDC to USD Conversions

Coinbase customers who convert more than $75 million of USDC to USD will incur fees based on the converted amount.

Coinbase will charge fees for converting USDC to USD if the transaction exceeds $75 million.

Updated: January 30, 2024 01:54 EST | Reading Time: 2 minutes

In an unexpected development, cryptocurrency exchange Coinbase has announced a new fee structure for large-scale USDC to USD conversions. These changes, which primarily impact institutional clients handling significant transaction volumes, signify a shift in Coinbase’s fee policy.

According to the announcement published on Coinbase’s website, institutional clients conducting USDC to USD net conversions exceeding $75 million within a rolling 30-day period will now be subject to varying fees based on the converted amount.

Under the new plan, conversions between $75 million and $150 million will incur a 0.1% fee, while transactions ranging from $150 million to $500 million will be charged a 0.15% fee. Converting USDC to USD for amounts surpassing $500 million will result in a 0.2% charge.

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Exemptions and Special Conditions in Coinbase’s Fee Policy

However, there are exemptions and special conditions for certain Coinbase users. Coinbase Prime customers who hold assets exceeding $500 million or maintain an average of $100 million in USD/USDC throughout a calendar month will be exempt from USDC Conversion Fees, as stated in the company’s announcement.

Furthermore, participants in the Coinbase Exchange Liquidity Program who achieve Tier 1 or Tier 2 status will also enjoy an exemption from USDC conversion fees, provided they fulfill their monthly eligibility requirements.

A spokesperson from Coinbase emphasized their commitment to innovation and responding to user feedback, stating, “Coinbase is committed to innovating our product offerings and listening to user feedback to ensure we deliver the premium experience that our customers expect while also driving our business goals.”

Differing Reactions

Social media reactions to Coinbase’s new fee structure have been mixed. Gabor Gurbacs, Director of Digital Asset Strategy at Van Eck, criticized the decision, emphasizing that the fees could potentially deter large traders and market makers from using Coinbase as an off-ramp for their transactions.

Interestingly, user @NahidElias speculated that there might be an ongoing disagreement between Coinbase and Circle, the issuer of USDC. They questioned why Coinbase shouldn’t be allowed to charge a fee, considering the limited options available for purchasing crypto.

In response, they also noted that Coinbase’s move could be seen as a smart business decision, benefiting smaller traders by reducing their fees. They compared Coinbase’s fees to those of Robinhood, affirming that trading crypto on Coinbase currently incurs higher costs.

It is worth mentioning that USDC is a stablecoin issued by Circle, and it is currently the second-largest stablecoin in terms of market capitalization, following Tether’s USDT.

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Q&A

Q: How will the new fee structure impact institutional clients using Coinbase for USDC to USD conversions?

A: Institutional clients conducting USDC to USD conversions over $75 million within a rolling 30-day period will be subject to varying fees based on the amount converted. The fees range from 0.1% for conversions between $75 million and $150 million to 0.2% for amounts exceeding $500 million.

Q: Are there any exceptions to the new fee structure?

A: Yes, Coinbase Prime customers who hold assets exceeding $500 million or maintain an average of $100 million in USD/USDC throughout a calendar month will be exempt from USDC Conversion Fees. Additionally, participants in the Coinbase Exchange Liquidity Program with Tier 1 or Tier 2 status will also enjoy fee exemptions.

Q: How have people reacted to Coinbase’s decision?

A: Reactions have been mixed. Some individuals, such as Gabor Gurbacs, have criticized the new fee structure, arguing that it may discourage large traders and market makers. On the other hand, others see it as a smart business move by Coinbase, potentially benefiting smaller traders by reducing their fees.

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References: 1. Coinbase Addresses Geth Dominance Concerns with Client Diversity 2. Fake Bitcoin ETF Announcement to Prove SEC Approval: A Sell-the-News Event? 3. Coinbase International Exchange Caps Perpetual Futures Leverage at 10x 4. Follow Us on Google News

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