Coinbase is often advised to budding investors as a good platform for trading. Indeed, it is one of the largest exchanges, with millions of users in over 100 countries. But is it truly without flaws? What is the downside of Coinbase?
Higher fees compared to other exchanges and unregistered securities are two major downsides of Coinbase. This is because the exchange has a higher compliance cost. Being an American company, it is dictated by the US SEC regulations. The brunt of the compliance cost is borne by its users.
In this post, we’ll go further into the cons of Coinbase for you.
The Downsides Of Coinbase – Higher Fees
One of the major downsides of Coinbase is its higher fee. This is a source of dissatisfaction for many users. Moreover, it is challenging to know these fees before completing a transaction. As a result, those new to this exchange feel confused.
The flat fee of Coinbase changes as per the transaction size. It is $0.99 for transactions below $10 or lower. The fee is $1.49 for transactions between $10 and $25.
If your transaction size ranges between $25 and $50, the fee is $1.99. transactions over $100 are not charged a flat fee. They are charged a percentage-based fee.
On top of it, Coinbase charges a spread-based fee. It is of 0.50%. Those using a bank account or a USD wallet get charged a spread-based fee of 1.49%. If you use a credit or debit card, it will add a 3.99% fee. Investors using wire transfers need to pay an additional fee of $10 for incoming and $25 for outgoing.
Differences in the maker-taker fee of Coinbase and Crypto.com
Maker Fees are paid by the trader who’s making a trade, which means buying or selling. Taker fees are those that the trader pays on behalf of someone else.
The tables for maker-taker fees of Coinbase and Crypto.com below will make it clear that Coinbase has charges rates that are higher.
Coinbase maker-taker fees
| Transaction | Maker fee | Taker fee |
| $0 to 10,000 | 0.40% | 0.60% |
| $10,000 to 50,000 | 0.25% | 0.40% |
| $50,000 to 100,000 | 0.15% | 0.25% |
| $100,000 to 1,000,000 | 0.10% | 0.20% |
| $1,000,000 to 15,000,000 | 0.8% | 0.18% |
| $15,000,000 to $75,000,000 | 0.6% | 0.16% |
| $75,000,000 to $250,000,000 | 0.3% | 0.12% |
| $400,000,000 and above | 0% | 0.5% |
Crypto.com maker-taker fees
| Transaction | Maker fee | Taker fee |
| Less than 250,000 | 0.0750% | 0.0750% |
| Less than or equal to 250,000 | 0.0700% | 0.0720% |
| Less than or equal to 1,000,000 | 0.0650% | 0.0690% |
| Less than or equal to 5,000,000 | 0.0600% | 0.0650% |
| Less than or equal to 10,000,000 | 0.0% | 0.0500% |
Why Is Coinbase Fee So High?
Coinbase Fee is high because it is exposed to multiple regulatory requirements in different places. Compliance with them increases the company’s operational costs. It shows in the high Coinbase fee.
Besides, Coinbase must follow certain tax guidelines, reporting needs, and licensing fees in various parts of the world. This increases the company’s cost further. Another reason for the downside of Coinbase with regards to fees is the security measures. The exchange has an arranged strong security framework, such as wallets and insurance. These protocols need to be maintained for user’s security.
To help people navigate the volatile crypto market, it develops price changes into its fee structure. These factors contribute to higher fees of the exchange.
Other Downsides of Coinbase
The expensive fee structure is a major downside of Coinbase. Apart from that, some other areas where it can be improved include the following:
1. High staking commissions
Coinbase takes a commission according to the rewards you get from the network. The standard commission is 35% for currencies like ADA, DOT, ATOM, SOL, MATIC, and XTZ. The staking commission is 25% for Ethereum. This staking fee is higher than other exchanges, which is around 5 to 20%.
Although offering to stake is a good thing, the high commission on yields is not. Commission rates keep changing and are not the same for every stake coin.
2. The inconvenience of frequent updates
Coinbase updates its platform frequently. While that is a good thing, it is not so convenient for the users. The platform’s frequent updates make it challenging for users to adapt to it. The updates often cause changes in layout. As a result, users find it tough to navigate and perform the relevant actions. When they do get their way around it, more updates come, and they have to learn how to navigate the interface all over again.
3. Lack of transfer options for trade portfolios
Coinbase does not give its users much freedom when it comes to transferring trade portfolios to other applications. Users find it challenging to transfer their portfolios to Venmo, Cash App, or PayPal. Thus, they are unable to manage their trade portfolios across platforms. This inconvenience is especially felt by those who need numerous applications to fulfill their financial requirements.
4. Poor customer service
Despite being a well-known cryptocurrency platform, Coinbase scores low on the front of customer service. One of the key areas where users have felt its customer service is lacking is identity verification. Issues with verifying identity on Coinbase are common and very annoying. The support team responds very slowly. Not only that, but Coinbase communication is also very unclear. This is especially true when it comes to verifying a user’s identity using a driver’s license.
The reason behind this may be the fact that Coinbase is a regulated financial institution. So, it is required to abide by stringent anti-money laundering (AML) and know-your-customer (KYC) regulations. This, in turn, can cause delays and a more nuanced verification process. Besides, thousands of users are currently using this platform. It can also result in delays.
Concluding Words
In conclusion, What is the downside of Coinbase stands as a prominent cryptocurrency platform, its notable drawback lies in comparatively high fees. Users’ discontent with these charges, compounded by existing network fees, raises concerns about overall cost-effectiveness. Despite this, Coinbase remains a widely used platform, urging users to weigh its benefits against the associated financial considerations.