6 Key Crypto Fees Explained & How They Cost You Money

There’s a price to pay for trading crypto, even without a third party such crypto exchange withdrawal fees as a brokerage house involved in the transaction. Online networks must be managed, trades must be documented and crypto exchanges must make money to support the role they play. Kevin started in the cryptocurrency space in 2016 and began investing in Bitcoin before exclusively trading digital currencies on various brokers, exchanges and trading platforms. He started Hedge With Crypto to publish informative guides about Bitcoin and share his experiences with using a variety of crypto exchanges around the world. The platform boasts one of the lowest fees across its spot and futures markets with zero fees for maker orders (i.e. using limit orders to provide liquidity).

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent, a Motley Fool service, does not cover all offers on the market. CNET staff — not advertisers, partners or business interests — determine how we review the products and services https://www.xcritical.com/ we cover. A fully operational exchange generally discloses their cryptocurrency reserves.

Making Sense of Crypto Exchange Fees: A Comprehensive Breakdown

Funding is recalculated every funding period to keep the balances in check. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. The comments, opinions, and analyses expressed on Investopedia are for informational purposes only.

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The popular stock broker Robinhood (HOOD 0.2%) also offers trading services for a handful of cryptocurrencies. The company says that your crypto trades are commission-free on Robinhood, with a 0% fee for any type of order. Transaction fees are higher for “Takers,” who use market orders that fill immediately at the current market price.

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In contrast, countries like Japan, Singapore, and Switzerland have more favorable regulatory environments for crypto trading, resulting in lower fees for users. When there is high volatility, exchanges may increase their fees as they have to constantly adjust to changing market conditions and take on more risk. On the other hand, decentralized exchanges (DEXs) operate on peer-to-peer (P2P) networks, eliminating the need for a central authority. Users trade directly with each other, and market forces determine fees. The total market capitalization of all cryptocurrencies has surpassed $2.7 trillion, indicating rapidly increasing demand and adoption of digital assets. Crypto.com has accepted your staking request and your assets will be staked soon.

How is a Cryptocurrency Exchange Different from a Cryptocurreny Wallet?

If you’re shopping around for the best cryptocurrency app or exchange, it’s difficult to make direct fee comparisons as there’s very little standardization across the platforms. One exchange might charge more to deposit money but offer cheap withdrawals. Another might seem to offer free trading but give you poor exchange rates. WOO Network was launched in 2020 and offers a well-rounded platform that comprises both a centralized (WOO X exchange) and a decentralized exchange (WOOFi). This gives WOO Network the added versatility as a one-stop trading platform for crypto investors and traders with access to spot, leverage, liquidity farming, and DeFi swaps.

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Each exchange has its own fee features, so it’s essential to consider these costs when choosing an exchange. Factors like trading volume, deposit/withdrawal fees, and maker/taker fees can significantly impact your trading profits. Some exchanges might still charge a per-transaction fee, but for the most part, they have transitioned to a combination fee schedule similar to the one used by Coinbase. As such, small and infrequent trades are not cost-efficient at cryptocurrency exchanges, unless you’re only looking to buy a cryptocurrency.

Comparing Fee Structures: Flat, Tiered, and Percentage-Based Fees

But if you plan to hold investments long term and make minimal trades, it might be less of a deciding factor for you. For this reason, seasoned traders are always on the lookout for quality platforms with lower fees, and exchanges are constantly in a fierce battle, trying to offer better fees than the competition. After all, trading fees are how exchanges make money, and how they can keep their business running.

Key Crypto Fees Explained & How They Cost You Money

Spot fees have largely disappeared from major brokerages when trading equities, like stock and mutual funds, but most crypto exchanges still charge them. A 0.5% fee on a $100 transaction would result in you paying 50 cents to the exchange. Many exchanges use tiered pricing, adjusting prices based on factors like the dollar value of all your trades in the past 30 days. The crypto exchange fees depend on the type of exchange, i.e. either centralized or decentralized. Because centralized platforms may have lower trading charges due to high liquidity, while decentralized exchanges have multiple other charges including gas fees, margin fees, etc. Exchange fees contribute to determining the overall profitability of trading on a particular platform.

While looking for the right combination of these crucial features, you should consider investing in safer asset classes such as stocks instead. When well-respected corporations dip their toes in the crypto opportunity, you can gain exposure to the same thrilling but dangerous market by investing in these companies instead. This form of ledger technology is what’s behind cryptocurrencies and other tech trends.

This is achieved by charging a funding fee to sellers, which is paid to the buyers. Simply put, funding fees are charged to one side of the trade and paid to the other side of the trade. For every trade, there is a certain platform which charges fixed percentage fees, ranging from 0.1 to 1%. These flat charges are charged for each trade, regardless of the order type or services.

• Hedge With Crypto aims to publish information that is factual and accurate as of the date of publication.
• If you want to avoid withdrawal fees altogether, consider using exchanges like Kraken, Gemini, or FTX, all of which charge zero withdrawal fees regardless of the coin being transferred.
• KuCoin Convert supports 26 crypto assets that can be swapped instantly into Tether (USDT) and vice versa, without any hidden fees.
• To cover these expenses, exchanges may charge higher fees for users in the U.S. compared to other regions with looser regulations.
• Location and other guidelines before you begin placing transactions in digital currencies.

Or you might want to move your cryptocurrency to another platform, a non-custodial wallet, or another person’s wallet. El Salvador has become the first country to make bitcoin into legal tender while China has banned cryptocurrency exchanges and initial coin offerings. Cryptocurrency has even made waves in the real estate industry, as a Miami-area penthouse sold in 2021 for what could potentially be a record price — $22.5 million in cryptocurrency.

Flat fees involve a fixed cost per transaction, irrespective of the transaction size or currency. While some users may prefer the simplicity of flat-fee structures, it’s essential to consider how the flat fee will impact your specific trading volume before selecting an exchange using this model. To minimize network fees, consider using customizable wallet options that allow you to alter the gas fee you’re willing to pay. Some exchanges also offer services to optimize network fees for you, enabling you to save on costs without compromising transaction speed. Crypto exchanges typically charge withdrawal fees when you move cryptocurrencies from the exchange wallet to an external wallet or another exchange. These fees vary based on the type of cryptocurrency, network congestion, and other factors.

Maker and taker fees start at 0.16–0.26% and can go as low as 0.00–0.1% for high-volume traders. Crypto deposits are free, but fiat deposits vary on the currency and method used. All withdrawals follow suit, with crypto withdrawals being relatively cheaper than fiat. Binance offers a flat taker and maker fee (0.10% and 0.20% respectively), allowing traders to avoid heightening costs as their trading volume increases. When there is high demand for a cryptocurrency, trading volume increases and liquidity improves. As a result, exchanges may lower their fees to attract more traders and capitalize on the increased market activity.

Different exchanges employ unique fee structures to remain competitive in the market. By understanding the various fee models, you can choose an exchange that best aligns with your trading behavior and reduces your overall costs. Coinbase was formed in 2012 with the goal of granting everyone access to a cryptocurrency financial system. The exchange became publicly traded after an initial public offering and listing on Nasdaq in April 2021. Cryptocurrency fans can choose from over 400 cryptocurrencies on Binance; however, U.S. customers can only select from a little more than 150 cryptocurrencies on Binance.US due to regulations.

Cryptocurrency is a digital asset that, to date, is not controlled by any regulatory party, including the government. Cryptocurrency is hosted on networks and computers all over the globe and, at present, trades are made between buyer and seller, with no third-party running point. The news and sentiment on cryptocurrency vary — and so do the experiences of those who trade it.

When you liquidate cryptocurrency into fiat — government-backed — currency, you are likely to face fees for that withdrawal and the related deposit into your digital wallet. Fidelity also offers 0% commission trades for retail investors, but it charges a 1% spread on every transaction. Hedge With Crypto aims to publish information that is factual, accurate, and up-to-date. The information about a specific cryptocurrency exchange or trading platform in reviews and guides may differ from the actual provider’s website. Unlike traditional stock or commodity markets, where fees have been reduced in the last few years, crypto trading generally costs more. For crypto investors planning to make frequent trades, finding an exchange with low or no spot fees is important because it could add up to significant savings.

Crypto traders are free to choose when to trade but many exchanges hide their fee structures which makes traders confuse about overlapping fee structures and discounts. To be eligible for commission-free, zero spread, and zero trading fees on Shapeshift, users need to hold their native FOX tokens. When users create an account, Shapeshift deposits 100 FOX tokens for free into the account.