Cryptocurrency Exchanges Turn Up the Marketing by Offering Lower Fees to Attract New Investors
There are two virtual currency exchanges that are trying to attract investors by offering lower fees for traders. Seed CX is one of these exchanges that is aimed at institutional investors. According to The Block, the platform offers one of the lowest costs to execute a trade.
The firm is currently offering competitive pricing compared to other virtual currency exchanges that are currently available in the market. As the crypto market becomes more competitive, having lower fees at an exchange is very important for users.
The U.K. rival LMAX Digital is also offering very low pricing. Indeed, it is possible for takers to have fees as low as 2 basis points. At the moment, the platform trades two of the most liquid assets, Bitcoin (BTC) and Ethereum (ETH). There are other exchanges that offer a larger number of trading pairs and coins.
Traders that move less than $10 million in 30 days have 8 basis points in fees, more than half that of Coinbase Pro, one of the most popular trading platforms in the market. These fees are also lower than on Kraken, ItBit, Gemini, Bitstamp, and others.
Greg Tusar, the co-founder of the institutional cryptocurrency broker commented during a conversation with The Block:
“Compression will come from supply and demand. I fully expect crypto to trend towards Equity and FX commission models in the next decade. Current retail led fee schedules are not sustainable in an institutional capital market. Investors and real money clients will expect added value for high fees not just a simple matching of orders and access to liquidity.”
Exchanges will move towards compression due to the fact that platforms want to survive and achieve a greater scale. There are several exchanges that are trying to improve their infrastructure, something that can drive costs down. Coinbase, for example, is matching engine infrastructure out of Chicago offices.
The president of CoinList, Andy Bromberg, explained that 2019 will be an important year for fee compression for crypto exchanges. Thus, he agrees with Tusar about the trend of the market for crypto platforms during 2019.
He said that exchanges trend towards lower fees and consolidation. He went on saying that this happens because exchanges are currently offering similar services and became very similar in terms of services.
There are different companies that are currently trying to launch their new services to the market. Fidelity Digital Assets is trying to launch a new execution business and help clients trade across a wide range of markets.
In 2018, crypto exchanges experienced lower volume due to a bear trend. The profits that platforms experienced during the last quarter of 2017 and the first quarter of 2018 were exceptional. If they want to increase the number of traders on their platforms, one of the best ways to do it is by reducing the fees that they have for executing trades.