Coinbase Raises USDC Conversion Fees to Stabilize Revenue Amid Earnings Struggles

Coinbase has announced a significant change in its fee structure for USDC to USD conversions, introducing a 0.1% fee for users who convert more than $5 million in stablecoin within a 30-day rolling period. The policy is set to take effect on August 13 and marks a notable shift from the previous threshold of $40 million, above which fees began at 0.05% and scaled up to a maximum of 0.2% for conversions exceeding $200 million. This move is part of the exchange’s broader strategy to stabilize revenue amid two consecutive quarters of earnings misses [1].

The change comes as Coinbase reported $1.5 billion in Q2 revenue, below analyst expectations, and experienced an 8% drop in its stock price following the earnings release. While stablecoin-related revenue rose 12% year-over-year to $332 million, the broader financial outlook remained challenging, with a 95% decline in net income in Q1 due to unrealized losses on crypto holdings [1].

Will McComb, senior product manager for stablecoins at Coinbase, described the new fee policy as an “experiment” aimed at assessing its impact on USDC off-ramping. He emphasized that the platform remains committed to being a leading hub for stablecoin usage and acknowledged the user backlash, including comparisons from critics like Ryan Sean Adams of Bankless, who warned that the move could set a problematic precedent resembling traditional banking practices [1].

Some in the crypto community suggest the fee adjustment is a response to arbitrage opportunities involving Tether (USDT). Cobie, a crypto influencer, noted that users had been converting USDT—subject to a 0.1% fee or a minimum $1,000 for redemptions above $100,000—into USDC to bypass costs and effectively reduce USDC supply. Coinbase CEO Brian Armstrong affirmed this view with a simple “Yep” in response [1].

Bloomberg ETF analyst James Seyffart likened the move to the create/redeem fees in ETFs, suggesting that Coinbase is passing on the cost of facilitating one-way flows in and out of USDC. As the exchange absorbs some redemption-related costs, it is now shifting these expenses to users through a tiered fee structure to help stabilize revenue [1].

Meanwhile, Coinbase is reigniting its expansion efforts in India. The exchange’s chief legal officer, Paul Grewal, recently met with Karnataka’s IT minister, Priyank Kharge, to explore deeper engagement with India’s digital transformation and blockchain infrastructure. Grewal emphasized Coinbase’s interest in supporting the region’s tech development through initiatives such as developer tools, cybersecurity collaboration, and capacity-building programs [1].

The discussions followed Grewal’s public remarks on X, where he highlighted Coinbase’s commitment to contributing to the “on-chain future” being built in the region. Kharge confirmed the collaboration, noting that Coinbase’s developer platform is already simplifying blockchain development for local innovators. The two parties explored potential joint efforts, including training programs and hackathons [1].

This marks a strategic pivot for Coinbase in India, where it previously scaled back operations due to regulatory challenges. In late 2023, the exchange asked Indian users to withdraw funds after discontinuing retail services. In April 2022, it also halted support for the United Payments Interface (UPI) shortly after launching in the country. However, recent engagements signal a shift in tone as Coinbase seeks to re-engage with Indian regulators and rebuild its presence in the market [1].

Source: [1] Coinpaper.com (https://coinpaper.com/10407/coinbase-to-charge-higher-fees-for-usdc-to-usd-conversions)