Coinbase Introduces 0.1% Fee on Large USDC-to-USD Conversions Amid Revenue Struggles

Starting August 13, Coinbase will begin charging a 0.1% fee on USDC to US dollar conversions that exceed $5 million within a 30-day rolling window. The move marks a significant change to the platform’s long-standing fee-free conversion policy, as the company grapples with back-to-back earnings disappointments.

Fee Applies to Net Conversions Above $5 Million

Under the new policy, net conversions — calculated by subtracting USDC purchases from USDC sales — will be subject to the fee once they surpass the $5 million threshold over a 30-day period. This is a notable reduction from the previous $40 million limit, which had offered fee-free off-ramps to larger entities and institutions.

Currently, Coinbase charges a tiered fee structure for even larger conversions:

• 0.05% for $40M–$100M

• Up to 0.2% for conversions over $200M

Responding to Earnings Miss and Rising Costs

The decision comes on the heels of Coinbase’s second consecutive earnings miss. The company posted $1.5 billion in Q2 revenue, falling short of the $1.56–$1.59 billion projected by analysts. The underperformance triggered an 8% drop in Coinbase’s share price.

While stablecoin revenue rose 12% year-over-year to $332 million, the company’s total revenue and net income have declined notably. In Q1, Coinbase reported a 10% drop in revenue and a 95% plunge in net income, primarily due to unrealized losses on crypto holdings.

Coinbase: “We’re Running an Experiment”

Will McComb, Coinbase’s senior product manager for stablecoins, addressed criticism on X (formerly Twitter), explaining that the exchange is “running an experiment” to better understand how such fees impact USDC off-ramps.

“We’re committed to making sure Coinbase is the best place to use stablecoins,” he said, while noting that feedback is being closely monitored.

Hmmm…why

I don’t love the precedent here. What if this dropped to $10k. Feels like bank fees again @coinbase.

$1 USD = $1USDC right? pic.twitter.com/l9easdJM2t

— RYAN SΞAN ADAMS – rsa.eth 🦄 (@RyanSAdams) August 6, 2025

Critics like Bankless co-founder Ryan Sean Adams expressed concern that such fees set a troubling precedent — comparing them to traditional bank charges.

A Defensive Move Against Arbitrage and Cost Pressures?

Some industry commentators speculate the new fee is meant to deter arbitrage between USDT and USDC. Since Tether (USDT) charges a 0.1% exit fee (minimum $1,000, with a $100K redemption floor), many users have opted to swap into USDC and off-ramp via Coinbase for free.

Crypto influencer Cobie suggested the new fee aims to protect USDC’s supply by reducing such arbitrage. Coinbase CEO Brian Armstrong acknowledged this perspective with a succinct “Yep.”

Bloomberg ETF analyst James Seyffart compared the fee to ETF redemption costs, noting Coinbase is likely passing on some underlying facilitation expenses to the end-user.

“My guess is they’re offloading that cost … and then some,” he added.

USDC vs. USDT Market Dynamics

Despite the friction, USDC’s market cap has grown 47% year-to-date, slightly outpacing USDT’s 20% rise, according to DefiLlama. This suggests continued interest in the regulated stablecoin, even as fees begin to enter the equation.

Conclusion

Coinbase’s decision to introduce conversion fees signals a shift toward cost recovery and margin protection as the company battles revenue pressure. While branded as a temporary test, the change may have long-term implications for large-volume traders, arbitrageurs, and institutional users relying on Coinbase as a low-cost off-ramp for stablecoins.