Crypto Fees

One of the most difficult aspects of trading in cryptocurrency (besides picking tokens that will rise in value) is understanding where fees are payable and how fees are calculated. It would be great to know, up-front, how much I will pay in fees, but things are not always made clear in advance of making transactions. I even find figuring out what I paid in fees, after-the-fact, to sometimes be challenging.

The centralized exchanges that I have used, Coinbase.com and Crypto.com’ provide downloadable reports of transactions associated with the ‘hosted’ wallets. These are well-formatted and almost understandable without too much effort.

On the other hand, away from centralized exchanges, there are blockchain explorers for each blockchain and it is possible in many cases to download reports associated with Public Addresses for my wallet. These reports are not as easily understood as are those from the centralized exchanges. More effort is required to figure out just how much I paid and received from transactions.

My first venture into crypto was to buy some SUI through Coinbase.com, paid in CAD from a bank debit card. The record in the Coinbase.com report noted that I had: “Bought 20.081967231 SUI for 44.02893324043780866 USD” and the price of SUI was $2.0621. I had several general questions:

  1. Any debit card fees? It turned out there were none.
  1. Any CAD to USD conversion charges? The conversion rate for that date/time was 1.37636 (from TradingView.com) and the $60.60 CAD from my debit card was converted to $44.03 (rounded). So, there was no fee for conversion.
  1. Any trading fees? Under the heading of ‘Fees and/or Spread’ the Coinbase.com report told me I paid $2.172384659882987589 USD. Of the $44.02893324043780866 USD I paid, ‘fees and spread’ represented 4.9339934%, which, to me, is huge.

So, after this I learned several things and I think these generally apply to most central exchanges:

  1. Getting $CAD (or USD) into the Coinbase.com account. I found that the best option was using Interac. I eventually transferred some CAD from my bank using Interac. Although there were no transfer fees, however, it took about five full business days to show up in my Coinbase.com account.
  1. Buying crypto.
    1. I can buy crypto by paying with my bank debit card or a credit card. My experience indicated there were no fees as these were the equivalent of a purchase at a store.
    2. If I have money in my Coinbase.com hosted wallet, I can trade it for crypto. There are fees associated with every trade, whether from fiat (eg. CAD or USD) to crypto, or from crypto to crypto.
    3. Coinbase has a ‘basic’ version and a toggle to enable ‘Advanced Trading’. The fees under the basic version are higher (5% in my case) than they are on the Advanced Trading version (0.6% to 1.2%).
    4. The lowest fees are had by being a ‘maker’ (0.6%) rather than a ‘taker’ (1.2%). A maker puts in a Limit Order for a buy or sell at a specific price. A taker buys or sells using a Market Order, at the current market price. A maker may have to wait a while until a buy or sell order occurs. A taker’s Market Order will occur immediately. I have since found that even lower rates are available on Crypto.com.
    5. There are tiered rates on Coinbase.com Advanced Trading, so the more I trade, the lower the maker/taker fee rates go.
  2. Transferring crypto into and out of Coinbase. There seem to be no fees with transferring crypto from another wallet into my Coinbase.com hosted wallet. I have been charged network fees for transferring out, from Coinbase.com hosted wallet to another account or wallet, but the amount seems to vary depending on the network used and the type of crypto involved. More experience is necessary here and there isn’t any one place to look things like this up on the internet.
  3. Withdrawing fiat $CAD or $USD. I haven’t done this yet, but I have heard that it’s best to use a centralized exchange like Coinbase.com. I believe there are fees and maximum daily withdrawal amounts, but have no experience yet.

This was my experience using a centralized exchange. In another post, I’ll talk about my experience with decentralized exchanges and using an ‘unhosted’ wallet. In preparation for that, the list of potential fees will expand and include:

  1. Depositing fiat currency.
  2. Directly buying crypto using bank debit card or credit card.
  3. Converting fiat currency to crypto.
  4. Trading one crypto for another.
    1. Spread
    2. Network fees (aka ‘gas’ fees)
    3. Platform fees
  5. Converting crypto to fiat currency.
  6. Receiving crypto from elsewhere.
  7. Transferring crypto to elsewhere.
  8. Withdrawing fiat currency to a regular centralized bank.

One other thing. I’ve learned to think in USD, rather than CAD. Everything in the crypto world is related to USD. I still convert my wallet balance to CAD once in a while to know where I stand, but have learned that thinking is USD simplifies things, if simplify is the right word…..

As always, this is my learning from my own experience and research, not advice. So do your own research.

Thanks, Jim.

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