how does coinbase make money

Cryptocurrencies are all the rage nowadays. With thousands of people turning millionaires overnight through cryptocurrencies, everyone wants to invest in it. Cryptocurrency is virtual money that is secured by cryptography or blockchain technology.

In recent years, cryptocurrencies have become the most sought-after financial asset to buy. However, they come with a risk of fluctuated valuations.

Despite their ever-changing valuation, cryptocurrencies have appealed to a large number of people who trade in them regularly.  Cryptocurrencies can be bought and sold on various online platforms. One such platform increasingly getting popular is Coinbase.

Coinbase is a regulated cryptocurrency exchange marketplace online. It is taunted to be a world leader when it comes to crypto exchange. It has its presence in over 35 countries worldwide. 

Coinbase works by bringing buyers and sellers of cryptocurrency together on an online platform. Users can buy, store or sell their crypto coins on the platform, for a fee. The payout is in USD or Euros, based on the country.

Coin base works as a centralized space that lists cryptocurrencies on the stock market. 

Coinbase allows its users access to four platforms where they can trade and manage their cryptocurrencies- Coinbase, GDAX, CUstody, and Toshi. All these platforms have a smooth interface and provide instant liquidity for people selling their cryptocurrencies.

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How Does Coinbase Make Money? (2022)

Short History of Coinbase

Coinbase was formed by Brain Armstrong and Fred Ehrsam in the year 2012. It was the original idea of Brain Armstrong, a former Airbnb engineer, to have a centralized currency that would be based on blockchain technology and would be traded around the world.

He entered his name in the Y combinator startup incubator program and received a funding of 150,000$. 

The company finally launched its platform in October 2012. Through the platform, the users can buy and sell bitcoins.

The company continued to receive a series of funding. In 2013, the platform had 1 million active users. Many companies like Overstock, Dell, and Expedia started accepting bitcoin payments.

The company received another big funding of USD 75 million from Draper Fisher Jurvetson, USAA, the New York stock exchange, and several other banks.  Draper Fisher Jurvetson, the New York Stock ExchangeUSAA in January 2015 and launched a professional bitcoin trading platform for traders in the US stock market called the Coinbase exchange.

In September, Coinbase expanded its operations to Canada and Singapore. Coinbase finally listed its stock under Nasdaq in 2021 and became a public listed company.

The future growth engine of coinbase

Currently, the crypto market is valued at $1 trillion approximately, which is expected to only grow in the future.

Coinbase has an 11% market value in the cryptocurrency market. It is also the only regulated market platform in the US stock exchange, making it a strong player in years to come. 

The company advertises cryptocurrency as the “Future of money”. Cryptocurrencies are seeing a whole lot of new investors. Also, with the introduction of new cryptocurrencies, the future of the company seems to be shining bright.

Competitors of Coinbase

The biggest competitors of Coinbase are the deregulated players like Bitflyer, Webull, and Robinhood.

However, with coinbase’s superior trading platform and its loyal users, it will remain the market leader for years to come. 

With an unpredictable market like cryptocurrencies, people prefer trading from a regulated platform.

With Coinbase being the only regulated platform for cryptocurrencies, it will remain safe from its competitors for years to come.

How does Coinbase make Money?

In recent years, cryptocurrencies have grown in value and have provided traders with good returns. However, this does not guarantee money to the trading platforms. 

Cryptocurrency exchange platforms like coinbase make money through various methods apart from trading fees-

Here is a look at the details of the various methods in which Coinbase makes money

1- Fees and trade

Charging a transaction fee on buying and selling bitcoins is the foremost revenue source of coinbase, making it 90% of its total annual revenue.

Coinbase has a tiered model when it comes to trading fees.

The commission charges per trade depending on the value of the transaction and the country/Region

To break down the trading fee on coinbase, here is a table-

Value of the transaction

Fee in Dollars

Fee in Pounds

Fee in Euros


Less than or equal to 10$





More than 10$- Less than/ Equal to 25$





More than 25$- Less than/ Equal to 50$





More than 50$- Less than/ Equal to 200$




2- Coinbase Pro and Prime

For people who are professional traders and have a buy-sell policy according to market fluctuations, Coinbase Pro is for them, whereas Prime is for large institutions. Both offer a host of added services such as- 

  • An insurance cover of up to $250,000 in case of losses through hacking.

  • Detailed trade history and advanced filters

  • API where they can access real-time market data

  • A dedicated cOinbase customer service team to guide the users around the software.

The software identifies its users as either makers or takes and charges a fee accordingly.  A taker is the one who places an order at the market price, the order gets fulfilled.

A maker is the one who places an order that is not instantly fulfilled. The order remains in the books until another person places an order for the same. 

For users of Coinbase prime and rates are slightly lower than the above as the institutions carry out transactions worth millions on the platform.

3- Interchange fee

Coinbase offers the option of adding a credit card to its users. It makes money when they use a credit card to make payments. This is called the interchange fee. 

Coinbase has tie-ups with Visa and shares a revenue model where the transaction fee is split between both parties.

This fee is charged to the customer and is subtracted from the overall volume of the transaction. 

Coinbase also charges other fees such as 2.49% of the volume for liquidation of the cryptocurrencies and another small amount to withdraw the cash.

The company received another big funding of USD 75 million from Draper Fisher Jurvetson, USAA, the New York stock exchange, and several other banks.  Draper Fisher Jurvetson, the New York Stock ExchangeUSAA in January 2015 and launched a professional bitcoin trading platform for traders in the US stock market called the Coinbase exchange.

In September, Coinbase expanded its operations to Canada and Singapore. Coinbase finally listed its stock under Nasdaq in 2021 and became a public listed company.

4- Cashback

In most countries, debit card holders earn a cashback for every transaction they earn. When users make a transaction via their debit card, they earn 1% cash back when they purchase bitcoins.

Similarly, other cryptocurrencies have other percentages of cashback rewards.

Now, coinbase does not pay for the cashback by itself. Instead, it ties up with various banks. When users make a transaction through these cards, Coinbase makes a small fee and the banks reward the cashback to the users. 

Also, Coinbase offers its users a dedicated debit card and charges 2.49% of the transaction fee on all charges made through the card.

5- Interest on Cash

Coinbase uses the money residing in the account of its users and lends it to financial institutions on interest, just like other normal banks.

The interest paid by these financial institutions and other non-banking financial institutions is another main source of income that the coin base earns. 

Coinbase also levies its users a flat fee of 1.5% of the transaction amount as a cashout fee if the user wants to withdraw cash from its account.

The minimum cashout fee is 0.55$ and the cashout amount has to be more than that.

6- Coinbase Earn

Coinbase has a unique program for its users who are interested in learning about new cryptocurrencies. It hosts various courses on the same.

The course includes watching a series of videos and answering a quiz at the end. Users also earn a small reward in the form of a payout in the currency taught in the course.

Though coinbase does not directly advertise unknown currency on its platform, it is assumed that the company or the blockchain technology owners of the new currency pay a small fee to Coinbase to list its currency on the platform.

Coinbase Earn is in collaboration with, where clients pay the users rewards in cryptocurrencies for completing simple tasks like answering phones, replying to emails, or scheduling appointments.

7- Coinbase Custody

Coinbase Custody is a service that is exactly what the name implies. Coinbase provides custody services to some of its clients. Under this, coinbase holds and manages all the cryptocurrencies of the client on their behalf. 

Coinbase custody is an individual branch of Coinbase Inc which is regulated by the New York Department of financial services.

The services of Coinbase custody can be integrated with Coinbase Pro and Prime. It charges its Custody clients 50 basis points, which is equal to 0.0050% of the transaction value, for safeguarding their crypto assets.

Furthermore, an implementation fee of $10,000 is charged for starting the custody services.

Such high fees mean that it is not everyone's cup of tea. In fact, for a Coinbase to activate Custody services, the users need to deposit at least $1 million into the account.

8- Coinbase Analytics

Coinbase Analytics is a high-end software that is managed by Coinbase inc. It is one of the major sources of income for Coinbase, apart from its trading fee. 

Coinbase Analytics is a high-end software that allows its users to analyze cryptocurrencies on a micro and macro level.

It also helps investigate fraudulent blockchain activities and connect crypto transactions to the real world. 

The software is available on a contractual basis and comes at a premium price. The users are mostly high net worth individuals with a keen interest in cryptocurrencies or institutions.

9- Personal loans

Loans are a great way to raise funds and can be a good source of income, especially for Non-banking financial institutions. Coinbase also leads its users with instant cash and uses their crypto holdings as collateral. 

Users can borrow upt0 30% of their crypto holdings as a loan. The maximum loan amount provided by the firm is $100,000.

Coinbase charges 8% as an interest rate on its loans, which the borrowers have a year to pay.

However, this service is currently available to US citizens only.

10- Coinbase Ventures

Coinbase venture is a team launched by Coinbase in the year 2018.

This team works at identifying promising early-stage companies that work in the blockchain and cryptocurrency sector. 

The Venture team aims at either acquiring these new companies or listing their crypto curricles on the platform for a profit.

Final Words

Currently, Coinbase has raised a total of $ 538.67 million from over 43 investors and 17 rounds of funding.

Coinbase’s latest funding was from PIPE- || for $75 million, On 20th May 2022. It was valued at $8 billion at the time.

The firm made its debut on NASDAQ on April 14th, 2021. The current share price is $83.82. 

The company is valued at around $83 billion after the listing.

Some of its most prominent investors include Y combinator, Wellington management, Ribbit capital, and Global Tiger management.

Coinbase reported annual revenue of 4.03 billion by the end of the fiscal year 2021, in just 1 year of turning profitable.


  1. How much does Coinbase make off fees?

Coinbase reported annual revenue of 4.03 billion at the end of the fiscal year 2021. It is said that over 90%of this figure is from transaction fees, which is the main source of income for the company.

  1. Does Coinbase earn free money?

There are different income avenues for the company. However, none of them can be defined as free money. It provides its users an opportunity to earn free coins and cryptocurrency by being a part of the Coinbase Earn program.

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