Amidst growing competition from firms like Robinhood, Coinbase comes out with a new subscription service.
Coinbase, unarguably the biggest US cryptocurrency exchange, is testing a new subscription-based model called Coinbase One. It will offer benefits like fee-free trading and enhanced customer support on all days in addition to weekends and holidays. Currently, the firm charges all its users a commission and spread fee on the trading.
Although the new service would do away with the commission fee, users will still need to pay the spread fee as earlier. Only a few users would be eligible for this service. As per the report by The Block, users would also get improved account protection through reimbursement of up to $1 million in the case of losses incurred due to account hacking. The subscription cost has not yet been divulged.
The news was first reported by The Block.
Reasons for Coinbase to Opt for This Subscription Model
The major reason for this launch is to diversify Coinbase’s retail business which makes much of its profits from the transaction fees. According to Owen Lau, an analyst at Oppenheimer & Co., this new model could help reduce the volatility of profit-making, which is currently dependent on the price of Bitcoin and similar cryptocurrencies traded on the exchange. In his opinion, Coinbase One can make the company’s revenues more predictable.
With firms like Robinhood offering no-fee trading in addition to high-quality market data and margin investing as part of its Robinhood Gold subscription, Coinbase ought to come out in the open race. The former is now gaining customers rapidly with crypto now covering almost half of its transaction revenue. The subscription service is also representative of the continuous evolution of Coinbase in terms of serving its customers in the best possible way.
Coinbase, founded in 2012, is the leading cryptocurrency exchange in the US region that offers diverse crypto product mixes to investors, institutions and ecosystem partners in over 100 countries. With a total of 68 million+ users and $180B in assets, Coinbase has made it its mission to increase economic freedom in the world, thus making a global-level impact.
It sees itself as creating a crypto-economy featuring an efficient and transparent yet fair and accessible financial system where anyone anywhere can easily and securely trade cryptocurrencies. Being fully regulated and licensed, it enjoys the reputation of being one of the most trusted cryptocurrency exchanges in the country.
With analysts predicting the coming quarterly results showing a double-digit sequential decline, it remains to be seen the pilot segment Coinbase chooses for its Coinbase One subscription. If analysts are to be believed, the company would prefer to launch the service to investors with less trading activity. The reason is that Coinbase can lose out a lot of its transaction fees amidst the current losses it is incurring if it selects the investors who trade a lot. The impact and relevance of this new model would be seen in the coming months.