Coinbase is testing a subscription service that lets customers trade on the biggest US cryptocurrency
exchange without paying fees for each trade.
Customers will still pay so-called spread fees on cryptocurrency sales and purchases made through
the service. Currently, Coinbase customers pay a commission and spread fee. Any subscriber costs
weren't disclosed.
“We're always looking to learn more about how we can best serve our customers in different ways,”
Coinbase said in the statement Wednesday. “Right now we are still in early stages so everything
about the future product experience will be shaped by the feedback we receive from our users.”
The trading platform is experimenting with its fee structure amid growing pressure from companies
such as Robinhood, which are not charging trading fees and gaining users quickly. Crypto now
represents more than half of Robinhood's transaction revenue.
The subscription could also help make Coinbase's revenues more predictable, said Owen Lau,
an analyst at Oppenheimer & Co. Coinbase hasn't been giving forward guidance because of the
unpredictability of its sales, which are tightly linked to interest in and price of Bitcoin and other
leading cryptocurrencies. Bitcoin price in India as of November 4 at 10:44am IST stood at
Rs. 49.9 lakh.
“That would reduce lots of volatility going forward,” Lau said. “To me that's a positive to multiples
expansion. Trading is just highly unpredictable.” Today, Coinbase makes the bulk of its revenue
from trading fees, although it's been working to diversify its sales.
Coinbase will report its quarterly results on November 9. Analysts are expecting a double-digit
sequential decline in third-quarter revenue, due to a decline in trading volume and active users in
the wake of a second-quarter slump in Bitcoin that likely weighed on investor optimism early in the
third quarter.
Coinbase could offer the subscription to users who trade less first to help blunt any negative impact
on revenue, Lau said.
“If you try to ask someone who trades a lot, then you'd lose substantial transaction fees from that,”
he said. “I do believe Coinbase would go slowly and try to find a pilot segment first and see whether
that makes sense.”
The subscription service test was first reported by the Block.
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