Coinbase collects 0.1% of US dollar swaps from over $5 million

Coinbase will begin charging USD 0.1% for net conversions from Stablecoin USDC over $5 million in 30 days as Crypto Exchange has been struggling with revenue recently.

Starting August 13th, Coinbase will charge USDC (USDC) fees for US dollar conversions over $5 million over a 30-day rolling period.

This comes after Coinbase’s second quarter results shared last week missed revenue and revenue, and stocks fell. However, Stablecoin-related revenues rose 12% year-on-year to $332 million.

The company marks the second consecutive quarter of analysts’ missed expectations as first quarter revenues also fell below expectations.

Coinbase “Performing Experiments”

“I don’t like precedents here,” Bankles co-founder Ryan Sean Adams said in the X-Post sharing the Coinbase update. “What if this drops to $10,000? It feels like a bank charge again.”

sauce: Ryan Shawn Adams

Will McComb, senior product manager at Stablecoins at Coinbase, said the exchange is experimenting to understand how Exchange affects USDC conversions.

“We’re doing experiments to better understand how fees affect USDC off-ramping, especially as some competitors charge high fees to return to Fiat,” McComb said.

“Your point about this being a core feature is being asked and we are carefully monitoring all feedback. We are working to make sure Coinbase is the best place to use Stablecoins.”

Currently, Coinbase does not charge up to $40 million for net USDC conversion in 30 days. The fee will then kick in at 0.05% with a net conversion from $40 million to $100 million, and will expand to up to 0.2% with conversions above $200 million.

Fees to push tethers to USDC conversion

Some commentators speculated that the move would likely cover the costs the company incurred when managing USDC, the second-largest stub coin, in volume.

Others, such as Jordan Fish, a crypto influencer who has gone through “Cobie,” said that as the USDC supply is declining, users who convert tethers (USDT) to USDC (USDT) can stop converting free dollars.

“Tether has an exit fee. So the cheapest and most practical route was to swap USDT for USDC and then swap USDC for USD.

Coinbase CEO Brian Armstrong agreed with Fish’s comment and responded with a simple “yes.”

Tether charges a fee of 0.1% or $1,000 to convert USDT at a minimum of $100,000.

According to Defilama, USDT’s market capitalization has increased by 20% since the start of the year, while USDC’s market capitalization has increased by 47%.

Bloomberg ETF analyst James Seyfert said Coinbase likely is paying the costs, and the company is ongoing.

Related: Kakaobank plans to “actively participate” in the Stablecoin Market: Report

“I feel this is similar to the creation/repayment fees for ETFs. If you actually need to promote the creation and redemption of USDCs and promote the creation and repayment of USDCs based on a one-way flow from people who have some cost to do so,” Seifert said.

“My guess is they’re offloading that cost…and a few,” he added.

Coinbase revenue error

New fees will be incurred as Coinbase missed an estimate of analyst revenue for the quarter ended in June. The company reported revenue of $1.5 billion, but analysts expected revenue to range between $1.56 billion and $1.59 billion.

The company’s shares sank 8% after reporting its second quarter income report.

In its first quarter report, Coinbase saw a 10% decrease in total revenue and net profit fell 95% due to unrealized losses reported on Crypto Holdings.

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