Binance.US has decided to eliminate any fees on spot trading of several popular crypto assets. The US branch of the major exchange decided that it will no longer charge any fees for the spot trade of BTC to US dollars and three major stable coins: Tether, USDC and Binance USD.
In response, the shares of Robinhood are currently down while those of Coinbase are down by as much as 5%.
Binance.US Powerplay To Gain More Users
CEO Brian Shroder told Bloomberg that he believes that this news will generate positive user sentiment and will bring them more users.
Binance.US already has a low spot and general trading fees. Forbes Advisor ranked Binance.US number 1 amongst all crypto exchanges in the US, citing its industry-low fees.
Binance.US has confirmed that it will not make any money on zero fees crypto trading.
How This Compares To Robinhood, Coinbase
Robinhood also offers commission-free crypto trading, however, traders do have to pay the spread. Moreover, while Binance.US will not make on free crypto trading; Robinhood makes a lucrative sum by getting rebates from market makers.
In a strategy known as payment for order flow; instead of routing users’ orders to major exchanges; Robinhood routes them to partner market maker firms; which offer rebates to Robinhood. This strategy was heavily criticized by Gary Gensler; the chairperson of the Security and Exchanges Commission as a major conflict of interest.
Meanwhile, Coinbase fees for crypto trades range anywhere from 1% per trade for Coinbase Wallets to 4% for purchases with credit/debit cards. It has some of the highest fees of any crypto exchange. However, Coinbase CFO Alesia Haas told CNN that it does not get paid through order flow like Robinhood and that its fees are transparent.
As Binance.US competes for users through zero fees, how Coinbase, Robinhood, and other exchanges respond, only time will tell.