The move was announced after two consecutive quarters of missed earnings and is part of the exchange’s efforts to stabilize revenue. While Coinbase previously charged fees only above $40 million in conversions, the new threshold is a big shift. Senior product manager Will McComb called the policy an “experiment” amid backlash from users who compare it to traditional banking fees. Some analysts, however, suggest the fee may counter arbitrage involving Tether. Meanwhile, Coinbase is reigniting its expansion efforts in India, with legal chief Paul Grewal meeting Karnataka’s IT minister to explore blockchain development and public infrastructure projects.
New Fee Hits Big USDC Conversions
Coinbase will soon introduce a 0.1% fee on conversions of the stablecoin USDC to US dollars for net amounts of more than $5 million within a 30-day rolling period. This is expected to start on Aug. 13.
The move comes as the crypto exchange grapples with financial challenges after two consecutive quarters of missed earnings expectations. In Q2, Coinbase reported $1.5 billion in revenue—which was below analysts’ estimates—and saw its stock drop 8% after the results were released. Though stablecoin-related revenue increased 12% year-over-year to $332 million, the broader financial picture showed strain, including a 95% drop in net income in Q1 due to unrealized losses on crypto holdings.
(Source: X)
Currently, Coinbase does not charge for net USDC-to-USD conversions under $40 million within a 30-day period. Above that threshold, fees start at 0.05% and increase to a maximum of 0.2% for conversions over $200 million. The newly introduced 0.1% fee for conversions above $5 million is a big change that is aimed at cost recovery and operational adjustment.
Will McComb, Coinbase’s senior product manager for stablecoins, referred to the policy as an “experiment” that is intended to evaluate the impact of fees on USDC off-ramping. He acknowledged the community feedback and stated that Coinbase is still committed to being a top platform for stablecoin use.
Critics, however, raised some concerns about the precedent it sets. Bankless co-founder Ryan Sean Adams even compared the change to traditional banking fees, warning of a slippery slope.
Some in the crypto community suggest that the new fee is a response to growing arbitrage opportunities involving Tether. Crypto influencer Cobie pointed out that users were converting Tether (USDT), which has a high exit fee, into USDC to off-ramp for free, thereby shrinking USDC’s supply. Coinbase CEO Brian Armstrong agreed with this assessment, and replied with a simple “Yep” to the explanation. Tether charges a 0.1% fee or a minimum of $1,000 for redemptions above $100,000.
(Source: X)
Bloomberg ETF analyst James Seyffart drew comparisons between Coinbase’s move and the create/redeem fees in ETFs, and suggested that Coinbase is passing on the cost of facilitating one-way flows in and out of USDC. While Coinbase may be absorbing some costs related to redemptions, it seems like the exchange is now shifting those costs to users through a tiered fee structure as it looks to stabilize revenue.
Coinbase Reignites India Push
Despite its challenges, Coinbase is still looking for opportunities to grow. Paul Grewal, the chief legal officer of Coinbase, recently met with Priyank Kharge, the IT minister of Karnataka, to explore its deeper involvement in India’s digital transformation.
The meeting took place earlier this week, and shed some light on Coinbase’s interest in supporting India’s growing blockchain ecosystem, particularly in Karnataka. This is a state that is well known for its leadership in technology and innovation.
Grewal shared some of his enthusiasm on X by stating that Coinbase plans to contribute to the region’s tech development through initiatives like developer tools, cybersecurity collaboration, and capacity-building programs. He also stated that "the future is on-chain — and it’s being built here."
Minister Kharge confirmed the discussions, and revealed that Coinbase’s developer platform is simplifying blockchain development for local builders. The two parties also explored future collaborations, including training programs, incubation efforts, and potential joint hackathons. Kharge said the Karnataka government is very eager to explore blockchain technology for governance and digital public infrastructure.
This is not the government’s first foray into blockchain. Back in 2017, Karnataka hosted a seminar on blockchain and Bitcoin to better understand the implications of the technology for governance and regulation.
Coinbase’s outreach in Karnataka comes at a time when the exchange is seeking to re-establish its presence in India after regulatory hurdles forced it to scale back operations. In late 2023, Coinbase asked local users to withdraw funds as it discontinued retail services in the country. The company also halted support for the United Payments Interface (UPI) in April of 2022 just days after launching locally. However, recent developments suggest a shift in tone. Coinbase is reportedly in talks with Indian regulators and looking to re-engage with the market.
