While Coinbase tests the model with a limited audience, new startups are following suit to offer zero-commission trading. Is subscription-based trading the future for crypto?
Most Cryptocurrency exchanges work on a pay-per-trade model; clients trade, the exchange takes a commission. With this approach, users are paying hundreds or even thousands worth of their crypto in commission each month, and exchanges become the largest holders.
We ask the question, will this model last much longer, or will crypto enthusiasts flock to exchanges where they can pay a flat fee instead of a commission on every trade?
Everybody knows Coinbase, but perhaps you haven’t heard about Coinbase One yet. In short, Coinbase One is a beta program (limited audience) that allows users to trade without fees as well as benefit from other perks such as phone support and account protection; for a flat monthly fee.
And as evidence that Coinbase is not the only one, we found several startups, most notably Eve Exchange, who plan on offering a subscription-based zero-commission trading solution in the near future.
Ultimately, no one likes paying fees and everyone wants to hold onto more of their crypto (until they don’t), so it is likely only a matter of time until the pay-per-trade model is disrupted by membership and subscription fees.
Furthermore, zero-fee trading opens to the floor to a different type of trading activity where smaller trades can be placed without fees eating in profit, resulting in higher trading volumes and a healthier more liquid market.
To put it into perspective, if you are trading $50,000 per month (total volume) on one of the top 5 exchanges, you could be paying well over $100 in fees, over a year that’s $1200 and we all know that $1200 in crypto can turn into a lot more quite quickly.
Zero-commission trading opportunities are few and far between at present but we suspect that by this time next year there will likely be more than several options and those who fail to adapt will start losing customers.
Remember how fast things can change in crypto? Just 4 short years ago Binance didn´t exist, and much of their success can be attributed to their relatively low fees. Imagine the shift we could see if some exchanges cut out fees entirely.
We think a different approach will be received incredibly well by crypto traders across the globe and anything that helps us hold onto more of our crypto is a great idea so we are all for it – bring on subscription based trading!