Strike Now Allows Bitcoin Buys With Almost Zero Fees to Challenge Coinbase’s ‘Asinine’ Charges
After the US-based cryptocurrency exchange Kraken cut down the deposit fees to zero, now Chicago-based startup Strike is letting its US customers buy and sell Bitcoin for almost zero in fees.
Strike is best known for helping El Salvador adopt Bitcoin, which declared the cryptocurrency a legal tender along with the US dollar, which President Nayib Bukele touted as a remittance currency for Salvadorans overseas.
Now, this week, Strike has announced that it would only charge about 0.3% on every Bitcoin transaction in all the US jurisdictions it supports, which excludes Hawaii and New York.
Strike’s parent company Zap is registered as a money services business (MSB) with the Financial Crimes Enforcement Network (FinCEN). With a money transmission license in only one state, Washington, the company relies on a regulated third party, a state-chartered and regulated company called Prime Trust, for providing its services in other states.
With its latest move, Strike has challenged the likes of Coinbase, Paypal, and Square’s Cash App. The biggest crypto exchange in the US, Coinbase, went public in mid-April and is known for its hefty fees charging as much as 3.99% based on the transaction size and payment method.
In a blog post, Jack Mallers, founder and CEO of Strike, called Coinbase’s fees “asinine” and called his low fees move – throwing “a grenade in Coinbase’s HQ.”
Traditional stock brokerages have already been moving towards zero fees, especially after retail favorite Robinhood, which forced the likes of Charles Schwab, TD Ameritrade, and Interactive Brokers, along with eTrade, to offer no-fee stock trading to retail investors in 2019.
The cryptocurrency market is expected to see a similar development, with Wall Street analysts anticipating the same following COIN’s debut on Nasdaq.
When it comes to other crypto service providers, Twitter CEO Jack Dorsey’s payments company Square charges about 2.2% fees for bitcoin purchases, and PayPal and its subsidiary Venmo takes between 1.5% and 2.3% for amounts above $25.
With its 0.3% fee, Strike is not expecting to make any money on the new service as it will only cover the spread charged by market-making firms supplying bitcoin. In what he says is a “race to zero,” Maller further expects the fee to drop even lower to 0.1% as volume grows in the next few months. “The more our volume grows, the less our partners charge,” he wrote.
“Today, the cost to acquire bitcoin works its way towards zero. Buying bitcoin for no added fees is how it always should have been,” tweeted Mallers.
This new service will start with a waitlist and will be open to the public in the coming weeks. Afterwards, Mallers aims to allow Strike users to get paid in bitcoin, get rewards in BTC, and round-up-savings in the cryptocurrency.