Coinbase will charge a 0.1% fee on USDC to USD conversions over $5 million every 30 days.
The fee aims to reduce high volume exits and protect USDC liquidity as Coinbase faces falling revenue and trading volumes.
Users reacted to the new fee with frustration as it ended free stablecoin off-ramping on the Coinbase platform.
Starting August 13, Coinbase will impose a 0.1% fee on USDC-to-USD conversions exceeding $5 million in 30 days. This marks the first time the platform has charged for stablecoin off-ramping. The decision comes after the company reported weak Q2 results and a sharp 15% drop in its stock value.
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Coinbase aims to address revenue challenges while responding to market distortions caused by Tether’s redemption fees. USDC users previously enjoyed free off-ramping, which created a cheaper alternative compared to USDT.
The fee applies to net conversion volume within a rolling 30-day period. This is calculated by subtracting USDC purchases from sales. Coinbase stated that the move allows them to evaluate how fees impact USDC usage and liquidity.
User Frustration Grows as Policy Sparks Comparisons to Banks
The announcement triggered criticism across social media. Users compared the fee to traditional bank charges. Some questioned if Coinbase was adopting practices similar to legacy financial institutions.
Coinbase’s leadership defended the fee as a response to competitive disadvantages. Tether’s fees had made USDC the preferred route for large fiat exits. This shift affected Circle’s market share and reduced USDC supply.
To manage operational costs, Coinbase designed the fee to discourage large one-way conversions from USDC to fiat. The company said these conversions mirror ETF redemption flows, which often carry fees to cover backend costs.
Stablecoin Market Pressures Influence Strategy Shift
Observers say the change reflects ongoing competition between USDC and USDT. Tether continues to trade at a premium due to high demand for perpetual futures collateral. This premium drives more users to burn USDC during conversions.
The move affects large-scale traders who used Coinbase to bypass Tether's redemption charges. Coinbase now pushes such users toward Circle’s OTC minting services instead of public exchange platforms.
This adjustment helps Coinbase reduce redemptions and keep liquidity within its system. It also aligns with the exchange’s broader strategy to stabilize USDC’s position in the market.
Retail Trading Weakens While Institutional Focus Grows
Coinbase’s Q2 earnings highlighted ongoing financial pressure. Transaction revenue dropped by 39% due to reduced retail trading activity. Total revenue reached $1.5 billion, missing analyst expectations.
XRP generated 13% of transaction revenue, outperforming Ethereum’s 12% for the second quarter in a row. Meanwhile, Coinbase added 2,509 Bitcoin worth $222 million to its balance sheet, now holding 11,776 BTC.
Despite the purchase, performance lagged. Ark Invest offloaded $6.5 million in Coinbase shares in July after a major buy. This continued a trend of reducing exposure to underperforming crypto stocks. To improve its financial position, Coinbase announced a $2 billion convertible bond offering. The deal includes senior notes maturing in 2029 and 2032.
