Coinbase will begin imposing a 0.1% fee on conversions of the stablecoin USDC to U.S. dollars for net transactions exceeding $5 million, as the exchange faces mounting pressure from underwhelming earnings.
Effective August 13, the fee will apply to USDC-to-USD conversions that surpass a net threshold of $5 million over a 30-day rolling period. The net amount is calculated by subtracting USDC purchases from USDC sales, according to a notice published online.
The move follows disappointing second-quarter earnings released last week, in which Coinbase missed both revenue and profit expectations, leading to a sharp decline in its stock price. Despite the setback, the company reported a 12% year-over-year increase in stablecoin-related revenue, totaling $332 million.
This marks the second consecutive quarter in which Coinbase has fallen short of analyst forecasts, with first-quarter revenue also failing to meet expectations.
Coinbase “running an experiment”
“I don’t love the precedent here,” Bankless co-founder Ryan Sean Adams said in an X post sharing Coinbase’s update. “What if this dropped to $10k. Feels like bank fees again.”
Will McComb, Coinbase’s senior product manager for stablecoins, addressed the announcement by explaining that the company is testing how fees influence USDC-to-USD conversions.
“We’re running an experiment to better understand how fees impact USDC off-ramping, especially as some competitors charge higher fees to off-ramp back to fiat,” McComb said in response to the update.
He added, “We hear your concerns about this being a core feature and are closely monitoring all feedback. Our priority remains making Coinbase the best platform for stablecoin use.”
Currently, Coinbase does not apply any fee on net USDC-to-USD conversions up to $40 million within a 30-day period. Above that threshold, fees start at 0.05% for net conversions between $40 million and $100 million, increasing gradually to a maximum of 0.2% for amounts exceeding $200 million.
Fees Aimed at Curbing Tether-to-USDC Conversions
Some observers believe Coinbase’s new fee structure is meant to offset the costs of managing USDC, the second-largest stablecoin by volume.
However, others, including well-known crypto influencer Jordan Fish, also known as “Cobie,” speculated the fee may be designed to discourage users from exploiting arbitrage opportunities by converting Tether (USDT) to USDC and then off-ramping into U.S. dollars for free—effectively reducing USDC’s supply while maintaining USDT’s.
“Tether has an exit fee, which means the cheapest practical route was to swap USDT to USDC and then off-ramp USDC to USD, which shrinks USDC supply and maintains USDT supply. If I were to guess,” Cobie wrote.
Coinbase CEO Brian Armstrong appeared to confirm this theory with a brief reply: “Yep.”
Tether currently charges a 0.1% fee—or a minimum of $1,000—for redemptions, with a minimum transaction size of $100,000.
Despite the dynamics, both stablecoins have grown in market cap this year. USDT’s market cap is up 20% year-to-date, while USDC’s has surged 47%, according to DefiLlama.
Bloomberg ETF analyst James Seyffart likened the move to ETF-style creation and redemption fees, suggesting Coinbase is simply passing on its own operational costs.
“This feels similar to a create/redeem fee for an ETF. If they actually have to facilitate creating and redeeming USDC based on one-way flow, they’re [probably] incurring some sort of cost to do that,” Seyffart said. “My guess is they’re offloading that cost … and then some.”
Coinbase’s earnings miss
Coinbase introduced new fees after missing analysts’ revenue expectations for the June quarter. The company reported $1.5 billion in revenue, falling short of the projected range of $1.56 billion to $1.59 billion.
Following the earnings release, Coinbase’s stock dropped 8%.
In its Q1 report, the company posted a 10% decline in total revenue and a 95% plunge in net income, largely due to unrealized losses on its cryptocurrency holdings.
