Coinbase is a digital currency exchange founded in 2012 in the US. In 2016, it rebranded the Coinbase Exchange to the Global Digital Asset Exchange (GDAX), its primary asset. It is one of the most recognized exchanges globally, facilitating cryptocurrency exchanges with fiat currencies in 32 countries. Its cryptocurrency wallet is available in 190 countries. Coinbase caters to over 35 million traders from over 100 countries, has trading volume in excess of $220 billion, and has over $7 billion of assets in storage. Coinbase has a global team consisting of over 1,000 employees; moreover, it has raised more than $500 million in funding from fifteen investors. The management team believes that cryptocurrencies are the future of money, and that it will create a more open, fair, and efficient financial system. Coinbase is well-positioned to remain an essential part of the evolving cryptocurrency sector, particularly in the US.
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Regulation and Security
Since Coinbase is neither a regular broker or financial company, the regulatory environment remains disjointed. In the US, this exchange maintains registration with FinCEN as a Money Services Business. Coinbase is not an SEC-registered broker nor is it regulated by the Commodity Futures Trading Commission (CFTC), or a member of the National Futures Association (NFA). Coinbase has an operating license from each US state which requires it; presently, that is 44 states plus the District of Columbia. Only 2% of assets remain online, and an insurance policy is in place which would cover any losses as a result of a breach of physical security or cybersecurity, or by employee theft at Coinbase.
A Coinbase user agreement for non-US traders, issued by its UK subsidiary, Coinbase UK LTD, is the only document available for international traders. In the US, Coinbase complies with the Bank Secrecy Act and the USA Patriot Act, and in the UK, Coinbase maintains only a business registration. Coinbase seeks to acquire an operating license in every jurisdiction where local law requires it; on a global level, it remains fully compliant with all applicable laws and regulations. In 2018, Coinbase acknowledged that some customers were overcharged for credit/debit card purchases; it is important to note that the fault was not with Coinbase itself, but with the banks, and occurred after they changed the merchant category code (MCC) for cryptocurrency purchases. Some issues with the availability of client funds emerged in 2018 in the US, per complaints filed against Coinbase with the Consumer Financial Protection Bureau. Overall, traders can trust the safety and security of Coinbase.
Coinbase complies with all applicable laws globally, but regulatory oversight, such as that for a traditional broker or exchange, does not apply.
Non-US traders have a user agreement with the UK subsidiary.
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Coinbase earns the majority of its revenue from commissions charged with each fiat transaction. A four-tier flat fee structure exists, together with a variable percentage-based fee that is charged by the payment processor; in each instance, Coinbase will claim whichever fee is greater. Additionally, an 8% annualized interest rate for margin trading applies. Revenue estimates for 2019 were $520 million, of which approximately one-third came from the UK subsidiary.
The four tiers increase in somewhat small increments, as outlined below:
- Tier 1 is for transactions below $10.00, which incur a flat fee of $/€/£0.99.
- Tier 2 is for transactions between $10.01 and $25.00, which incur a flat fee of $/€/£1.49.
- Tier 3 is for transactions between $25.01 and $50.00, which incur a flat fee of $/€/£1.99.
- Tier 4 is for transactions between $50.01 and $200.00, which incur a flat fee of $/€/£2.99.
A four-tier flat fee structure for fiat transactions exist.
Network transaction fees, which vary on the blockchain where they occur, also apply. Traders should be aware that Coinbase charges an estimated blockchain fee, which may not be the actual amount charged.
Transactions on the proprietary trading platform, Coinbase Pro, also feature a mark-up on spreads (either a flat fee or a percentage of the transaction).
Cryptocurrency conversions face mark-ups as high as 2.00%.
Various geographical locations feature different payment processor costs.
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What Can I Trade
Coinbase maintains only 93 assets, a very disappointing number for any pure digital asset exchange, especially considering that there are almost 7,000 digital assets available globally. The market breadth at Coinbase, via its proprietary trading platform, Coinbase Pro, ranks as the most popular US-based exchange; even so, it remains significantly behind global competitors. Not all cryptocurrencies are available for full trading, as identified by the asset list on the website, further highlighting the market exposure. Nonetheless, Coinbase does serve most retail traders well, especially those who seek to transact on what is popular on social media. More sophisticated traders will likely make the determination that the asset choice as insufficient. Traders deserve more from an exchange with a market-leading position.
With only 93 assets, the choice is very disappointing at Coinbase.
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All retail traders will manage their cryptocurrency portfolio from the same account type, with a maximum transaction fee of 0.50%. While there is no minimum deposit, traders must have sufficient capital to meet the minimum transaction size, which is 0.001 BTC, 0.01 BCH, 0.01 ETH, or 0.1 LTC. Any orders placed below this limit will face automatic rejection. Maximum leverage of 1:3 applies but expires after 25 days. Coinbase will then sell crypto assets for US Dollars and renew the loan under identical conditions. Margin lending faces an 8% annualized interest payment, which is comparable to swap rates at Forex and CFD brokers.
Coinbase grants one account type to all retail traders.
Maximum leverage of 1:3 exists.
An 8% annualized interest payment applies.
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Coinbase Pro is the proprietary webtrader, a depressingly limited trading terminal without proper research tools. An order book and trade history is available to the left and right of the chart, with the ability to overlay two moving averages as the only technical indicators. A simple order form processes trade management, but the overall presentation of Coinbase Pro is inadequate. It is suitable as an execution-only platform, adding to disappointments in the core product and services portfolio of this digital currency exchange.
Coinbase Pro is an execution-only terminal, lacking essential analytics tools.
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While Coinbase has several services geared towards institutional clients, such as Coinbase Prime, Coinbase Commerce, Coinbase Custody, and Coinbase Ventures, retail traders do not have access to any unique features. Most of the raised capital flowed towards developing enterprise solutions, with a distinct neglect for retail-focused products and services. One fact to note is that 98% of deposits are in secure offline storage with excellent security features; as such, traders can rest assured their funds are well-protected.
Coinbase ensures the safety of client deposits through enhanced security features.
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Research and Education
This digital currency exchange does not provide any research or market commentary, which is not unusual. Coinbase is not a broker, but an exchange, which usually does not expand into market analytics. It does provide industry-related information and opinion pieces in its blog under the Around the Block segment. More live streaming news should be sourced for traders, similar to well-established exchanges, as the current product remains significantly behind that of competitors.
Around the Block grants industry-related content, but falls well short of granting traders even the most elemental news flow.
Where Coinbase fails in the market commentary, it shines with education. Though more than twelve years have elapsed since the first Bitcoin (BTC) was mined, and despite the seemingly limitless media hype surrounding the expanding cryptocurrency sector, the majority of traders remain misinformed. Coinbase created an excellent educational program which features eleven courses to introduce the most popular cryptocurrency assets to traders. The program consists of videos, followed by a quiz. After successful completion, new traders will receive a cryptocurrency reward, denominated in the cryptocurrency that is covered in each lesson. Completion of the course allows new traders to put their knowledge to the test. Essentially, rather than requiring payment for the education, Coinbase instead offers up to $115 worth of assets to all traders who are willing to educate themselves—clearly, the most exceptional feature at this digital exchange.
Coinbase offers an excellent educational section that pays new traders up to $115 to get educated and allows them to start a diversified cryptocurrency portfolio.
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The primary support channel is the FAQ section, which attempts to answer the most common questions, together with a support bot. A second layer of support is granted via a web form, while account assistance is accessible via phone. Most traders will find the answers on the well-explained website.
The FAQ section answers the majority of questions.
A second support layer exists via the web form.
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Bonuses and Promotions
Coinbase offers a volume-based discount on fees. Eleven tiers exist, calculated through cumulative volume over a 30-day period. The costs for what Coinbase refers to as “takers and makers” varies; the lowest available charge is 0.04% and 0.00%, respectively, while the initial one is 0.50% for both.
Fee Structure for “Takers and Makers”
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Opening an Account
A name, e-mail, and password complete the first step of the online account opening process. While Coinbase does not operate under any regulatory framework, it complies with AML/KYC requirements. The main difference is that a copy of the trader's ID satisfies the account verification procedure, without any proof of residency document. Coinbase has a mobile app to complete this process, allowing new traders swift completion.
Traders can open a new account in a matter of seconds.
Account verification via a copy of the trader's ID is mandatory.
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- Broker's Name : Coinbase
- Headquarter : United States
- Regulation :
- Type of Broker : Market Maker
- U.S. Clients Allowed :
- Minimum Deposit : None
- Maximum Leverage : 1:3
- Commissions / Spreads : Both
- Account 1 : Standard
- Demo Account :
- Islamic Account :
- Segregated Account :
- Managed Accounts :
- Deposit Options :
- Withdrawal Options :
- ETFs :
- CFDs :
- Commodities :
- Metals :
- Stocks :
- Oil :
- Gold :
- Binary Options :
- Indices :
- Type of Platform : Proprietary platform, Web-based
- Platform Languages :
- OS Compatibility :
- Trading Signals :
- Charting Package :
- Market Analysis :
- Chart Trading :
- Automated Trading :
- Scalping :
- Hedging :
- Mobile Alerts :
- E-mail Alerts :
- Trailing Stops :
- Guaranteed Stop Loss :
- Guaranteed Limit Orders :
- Guaranteed Execution :
- One-click Execution :
- OCO Orders :
- Interest on Margin :
- Web-based Trading :
- Mobile Trading :
- Website Languages :
- Support Hours : Unspecified
- E-mail Support :
- SMS Support :
- Chat :
Is Coinbase legit?
Yes, it is a legit US-based digital currency exchange with all relevant licenses in jurisdictions where it operates.
Is it safe to buy on Coinbase?
Traders can rest assured that Coinbase deploys excellent security features. It stores 98% of assets offline and carries an insurance policy.
How do I get my money out of Coinbase?
Withdrawal options consist of bank wires, credit/debit cards, and PayPal.
Can you get scammed on Coinbase?
Well-known scams are using Coinbase, particularly load-up scams. Traders should be aware that they are responsible for all transactions under their name as Coinbase does not accept fault for a scam.
Does Coinbase report to the IRS?
Yes, Coinbase does report to the IRS. In 2018, it forwarded information from 13,000 US traders to the IRS. Whenever a trader receives a 1099-K form, the IRS also receives a copy.Back to Top
Coinbase is a well-known digital currency exchange operating out of the US, with more than 35 million traders from over 100 countries. Despite significant shortfalls, including a sub-standard trading portal and excessive fees, its success can largely be attributed to an easy-to-use interface which allows new traders to buy cryptocurrencies. It does offer a series of institutional services, where it invested the bulk of over $500 million in received funding, but the retail sector represents the backbone of operations.
Most aspects are significantly behind those of well-established international competitors, but Coinbase excels in its approach to education. Instead of charging new traders or even offering it for free, Coinbase awards up to $115 in cryptocurrency assets to each trader who completes all of the educational sections. It complements its focus on first-time traders perfectly, allowing them to create a well-diversified cryptocurrency portfolio with eleven assets. Coinbase is extremely popular among US-based traders, and features proper security protocols; however, most international clients will find a superior overall exchange elsewhere.Back to Top
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