Is a zero-commission war about to erupt in the crypto arena?
Robinhood Markets on Thursday may have delivered the first shot across the bow in the trading of virtual assets, highlighting that buying and selling assets like bitcoin BTCUSD, +2.35% carries no transaction fees on its venue, pointing to fees that exist at competitors Coinbase Global COIN, -2.08% and Gemini and PayPal’s PYPL, +2.04% Venmo.
Coinbase explains its transaction fee structure here, noting that it also varies by region.
Robinhood makes the case that the fees aren’t insignificant in its promotion of its services, saying that “if you invested $100, you’ll pay around $3 in fees on other platforms, and could lose out on unrealized gains”
“With Robinhood Crypto, you get all of what you pay for,” writes the platform run by CEO Vladimir Tenev.
The media campaign centered on its zero-commission offerings in crypto come as Robinhood is on the cusp of becoming a public company as early as this month and views crypto as a major area of growth for the investment app that has marketed itself as a trading platform bent on democratizing investing for average folk.
Meanwhile, Coinbase reported some 56 million verified users and 6.1 million monthly active users, and $223 billion in assets. Coinbase went public in mid April and is expected to face heavy competition in the crypto that could result in fee compression for U.S.’s largest crypto platform.
Coinbase shares are down nearly 28% since its listing on the Nasdaq on April 14.
Calls and emails to the brokerages weren’t immediately returned.
Back in 2019, shares of discount brokerages plunged after Charles Schwab Corp. dropped commissions on U.S. stocks, exchange-traded funds and options, effectively launching a price war among retail investing arena.
Robinhood’s focus on pricing may similarly place pressures on its competitors.
However, Robinhood has received some push back from industry participants at times for taking payments for its order flow, in order to maintain its zero-commission structure.
“We receive uniform volume-based rebates from trading venues, but never consider rebates when deciding where to route your order,” Robinhood said in its blog on Thursday about its no-fee crypto trading.