Coinbase will charge a 0.1% fee on the net conversion of USDC to US dollars exceeding $5 million in a single month. This decision was made against the backdrop of Coinbase's recent profit setbacks.
As of August 13, Coinbase charges this fee on USDC (USDC) to US dollar conversions exceeding $5 million, calculated on a rolling 30-day basis, which is USDC purchased minus sold. Reportedly, the company's revenue and profit in the second quarter fell short of expectations, leading to a significant drop in stock price, but its stablecoin-related revenue grew by 12% year-on-year to $332 million.
Experimental fee strategy
Bankless co-founder Ryan Sean Adams expressed concern on social media. He added, 'If this limit drops to $10,000, it feels like bank fees.'
Coinbase's Senior Product Manager Will McComb responded that the exchange is experimenting to understand the impact of fees on USDC conversions. He stated, 'We are carefully monitoring feedback and are committed to ensuring Coinbase is the best place for using stablecoins.'
Currently, Coinbase waives fees when the net conversion amount in 30 days does not exceed $40 million, charges 0.05% for amounts between $40 million and $100 million, and charges 0.2% for amounts exceeding $200 million.
Rate adjustment may be to curb arbitrage
Some commentators suggest it may be to cover USDC management costs. Others speculate it is to prevent users from converting USDC to US dollars through Tether (USDT) to avoid fees.
The market share of USDT has grown by 20% since the start of the year, while USDC has grown by 47%. Some commentators believe that Coinbase may be absorbing costs and passing them on to users.
Background of poor earnings
At the time of the new fee policy announcement, Coinbase had not met analysts' expectations for second-quarter revenue of between $156 million and $159 million, achieving only $150 million, resulting in an 8% drop in the company's stock. First-quarter revenue also fell by 10%, and net income dropped by 95% due to losses in crypto assets.
