By
Steve Muchoki
April 24th, 2024
The Coinbase team has announced that Coinbase Pro, the exchange’s advanced trading platform which supports features not available to the consumer platform, will experience several changes on March 22.
The changes, published in a blog post, are significant. The most notable of these is an update of the fees structure, which will now impose relatively high maker fees: 0.15% for those trading less than $100,000 over a 30 day period.
Coinbase is one of the world’s largest cryptocurrency exchanges and was one of the pioneers in popularizing cryptocurrencies and making them accessible to the general public for investments and transactions. We already wrote of how recently, one more currency has been listed on Coinbase’s professional exchange. Stellar Lumens (XLM), the native cryptocurrency of the Stellar blockchain, is available for active trading on Coinbase Pro.
The company boasts more accounts than the likes of Charles Schwab. Coinbase CEO Brian Armstrong has the ambitious goal for Coinbase to become the “Google of crypto,” suggesting that its relevance to Web 3.0 could rival that of the internet search giant’s stamp on the early version of the internet. Armstrong himself was named among Fortune’s 40 under 40 list and has influenced Americans for Bitcoin.
However, Coinbase seemы to be sabotaging themselves increasingly. In their blog that was published on Friday last week, they announced that Coinbase Pro will implement a set of changes to “further optimize the market health of our platform.”
Adding Fees to Create More Efficient Market for Customers
They further explain that these changes were designed to increase liquidity, enable better price discovery for trades, and to make price movements smoother. They wrote:
“This will lead to a more efficient market and increase trading opportunities for all of our customers.”
Also, Coinbase Pro and Coinbase Prime will no longer take stop market orders. As a result of this, all stop orders will henceforth be submitted as limit orders and include a limit price.
The newly introduced market protection point for both Coinbase Prime and Coinbase Pro users will be now a total of 10 percent for all market orders.
The thing is, the Coinbase has even more to lose than many of its peers, making us asking if the growth has come too soon, too fast?
In the past, users had taken to Coinbase Pro precisely because of the lower trading fees. The alteration to the fees structure means that users have little reason to choose between Coinbase and Coinbase Pro.
Naturally, Coinbase users have questioned whether the change was motivated by greed, at least to a degree. Analysts are having multiple thoughts of this move having positive or negative impact.
Economist and trader Alex Krüger complained on Twitter about it. He stated:
“Coinbase Pro raising fees for smaller clients by 33% while lowering fees for larger clients. In a rational world, most Coinbase users would now move to Binance.”
In the same Twitter thread, Krüger also questioned Coinbase’s decision to disable stop market orders, claiming that stop-limit orders sometimes fail to execute because of slippage, suggesting using far off limits on limit orders as a workaround. Still, Krüger also admitted that those changes should lead to increased liquidity and trading activity.
With such changes, users will probably be going to consider closing their Coinbase account and trading on Binance instead, where the maker fees is 0.10%.
Nowadays, crypto investors have been talking about, and some even going through with, closing their accounts, following the #deleteCoinbase movement on Twitter in response to Coinbase’s controversial acquisition of Neutrino. The situation was further exacerbated when it was revealed that one of its third-party tracking providers had sold client data.
The listing of the XRP token also drew some negative attention to Coinbase as Ripple had violated one of its listing rules.
Coinbase remains one of the largest tech startups generating an estimated $1.3 billion in revenue last year despite the crypto winter. Trading commissions have a lot to do with its performance.
Without further argue, most analysts agree that if Coinbase is going to increase its prices for relatively low-capital investors, it will only bring further scrutiny its way.