New Conversion Fees Aim to Offset Operational Costs as Revenue Misses Targets
Coinbase will begin charging a 0.1% fee for net USDC-to-USD conversions over $5 million, marking a significant change in how the exchange handles large stablecoin transactions. The update, effective August 13, comes amid growing pressure on the company to improve revenue after missing earnings expectations for two consecutive quarters.
Previously, Coinbase allowed free USDC-to-USD conversions up to $40 million per 30-day period. But with the new policy, fee-free conversion is now capped at just $5 million. Beyond that, users will be charged based on a 30-day rolling net amount—the difference between USDC purchases and sales.
“We’re running an experiment to better understand how fees impact USDC off-ramping,” explained Will McComb, Coinbase’s senior product manager for stablecoins. “Some competitors already charge higher fees, so we’re closely monitoring feedback.”
Revenue Concerns Drive Change
Coinbase’s decision follows back-to-back quarterly earnings misses. The firm reported Q2 revenue of $1.5 billion, falling short of analysts’ estimates of $1.56 to $1.59 billion. Its stock dropped 8% after the announcement. In Q1, the company also posted a 95% decline in net income, citing unrealized losses on crypto holdings.
“This feels similar to a create/redeem fee for an ETF,” noted Bloomberg ETF analyst James Seyffart. “They’re likely incurring a cost and now passing it on to users.”
Fee Strategy May Target Arbitrage and Stablecoin Outflows
Industry voices suggest the fee may help curb Tether-to-USDC conversion arbitrage. Tether (USDT) charges a 0.1% exit fee, prompting users to swap into USDC for free off-ramping.
“If I were to guess, they’re trying to stop USDT to USDC swaps just to avoid Tether’s exit fee,” commented crypto influencer Jordan Fish.
Coinbase CEO Brian Armstrong echoed this by simply responding, “Yep.”
USDC’s supply has grown 47% year-to-date, while USDT is up 20%, suggesting strong demand—but also pressure on conversion mechanisms.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.