How Much Are Cryptocurrency Exchange Fees?

Initially a niche market avoided by traders and investors, cryptocurrency has grown into a class many investors get into for the possibility of huge returns. If you're interested in taking part in this sector, it's best to use a regulated cryptocurrency exchange to gain exposure.

Most cryptocurrency exchanges calculate fees in one way: a tiered-level structure that charges a percentage of your 30-day trading volume. Learn more about the fees you'll pay when you trade cryptocurrency so that you can develop strategies to keep them from eating away at your profits.

How Cryptocurrency Exchange Fees Work

There are three important factors that traders must consider when thinking about buying or selling cryptocurrencies from an exchange:

• Fee schedules: You might encounter wire fees (to transfer funds to and from your bank account), mining fees, account fees, spot fees, and tiered transaction fees
• Location: Many exchanges are unregulated, and some are only available to those who live in certain geographic areas
• Availability: Not all cryptocurrencies are available on every exchange

Cryptocurrency Exchange Fee Schedules

The most popular fee schedule used by cryptocurrency exchanges uses a tiered "maker" and "taker" scheme. It uses trading volume to create tiers and charges maker and taker fees based on your trading volume.

A maker is a party that creates a market on the exchange by selling cryptocurrency, and the taker is the party that takes it off the market by purchasing it. Each party pays fees for the transaction, but makers generally pay less.

Fee schedules at cryptocurrency exchanges are designed to encourage frequent trading in large transaction amounts worth thousands of dollars. Fees often decrease as a trader's 30-day cumulative trade volume increases.

For example, trading at Coinbase with a trading volume of less than $10,000 incurs maker and taker fees of 0.60% and 0.40%, respectively, while trade volumes of more than $10,000 decrease in tiers based on your trade volume.

The first four pricing tiers listed on Coinbase are:

You also pay less in the higher tiers as a maker because makers increase the market's liquidity, which allows the exchanges to continue trading.

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. If that's the case, most exchanges charge a spot trading fee to buy and take possession of a digital coin.

Cryptocurrency Exchange Location

Cryptocurrency exchanges are unregulated in many countries. Most regulators around the world have taken a hands-off approach to cryptocurrency regulation in some of its biggest trading markets.

However, cryptocurrency exchanges in the U.S. must register with the Financial Crimes Enforcement Network, the Securities and Exchange Commission, and the appropriate regulator for the state they operate in. This means that U.S.-based exchanges are regulated and may not offer the same services as exchanges based outside of the U.S.

Cryptocurrency Availability

Most well-known cryptocurrency exchanges do not offer access to all coins. Some only provide a few dozen, while others might offer hundreds. You might need to use different exchanges to get access to the cryptocurrencies you're interested in.

Top 2 Cryptocurrency Exchanges

Here is a brief comparison of trading fees for cryptocurrency at two of the more popular exchanges. The CoinMarketCap Spot Exchange Score is used to gauge exchange popularity. This score accounts for each exchange's web traffic, volume, average liquidity, and confidence.

Binance

Originally founded in 2017 and registered in the Cayman Islands, Binance established a U.S. version in 2019 with headquarters in California. By 2022, Binance was at the top of the list and out-trading all other cryptocurrency exchanges.

Cryptocurrency fans can choose from over 600 cryptocurrencies on Binance; however, U.S. customers can only select from a little more than 100 cryptocurrencies on Binance.US due to regulations. Internationally, Binance lets users trade the cryptocurrency futures markets, buy currency, earn cryptocurrency, create non-fungible tokens, and learn about all things cryptocurrency through the Binance Academy.

Most people who use Binance.US will be charged fees and have withdrawal limits. Fees are based on your 30-day trading volume and are offered in two tiers. Tier 0 offers free trading for makers and takers of all volumes, while Tier 1 fees range from 0.05% to 0.6% (takers) and free to 0.4% (makers), depending on trading volume. Fees go down by 5% if you use BNB.

In the U.S., you can trade USDT pairs, BTC pairs, and ETH pairs, but your choices are limited. In addition, you can make advanced trades on the price movements of these pairs or trade them over the counter.

Coinbase

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. It offers access to thousands of cryptocurrencies.

The maker/taker fees for using Coinbase's services are based on the current pricing tier when the order was placed, not on the post-trade tier. Also, Coinbase recalculates the pricing tier hourly and bases it on the total trading volume. While there are no account fees, Coinbase does charge mining fees.

The Bottom Line

You don't have to use a cryptocurrency exchange to buy or sell cryptocurrency. You can find parties to trade with via other methods, such as social media or newsgroups; however, cryptocurrency exchanges are services that bring traders and users together in one place, making it easier and more convenient to trade. For the service provided, exchanges generally charge fees to help them cover expenses. Not all exchanges have fees, but most regulated exchanges do. Exchange fees are usually based on a percentage of your trading volume and go down the more you trade.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info. As of the date this article was written, the author does not own cryptocurrency.