Coinbase, a major player in the retail crypto trading market, may be losing some retail crypto trading business to Robinhood, possibly due to Coinbase’s higher fees on small-ticket trades.
“Our analysis suggests that COIN’s share of combined COIN retail + HOOD crypto volumes trended lower in April vs. the approximately 65% ratio in the prior three quarters,” Mizuho Securities USA analyst Dan Dolev wrote in a note to clients, Bloomberg Law reported Thursday (June 15).
The fact that Robinhood (HOOD) did not increase spreads while Coinbase (COIN) has been raising fees for small-ticket traders to offset volume declines is probably why the former “attracted some customers to its platform,” he said.
Moreover, customers are starting to push back on Coinbase’s higher fees on small-ticket crypto trades, a practice in which Robinhood has not participated.
However, it’s not all bad news for Coinbase. The platform still holds a significant market share in the crypto trading world, and it has been making efforts to evolve and provide more comprehensive solutions for traders of all levels.
The cryptocurrency firm’s chief legal officer said at an investor conference Monday (June 12) that the company will also seek a legislative solution while it battles a lawsuit by the Securities and Exchange Commission (SEC), PYMNTS reported.
The SEC last week sued Coinbase — the largest crypto exchange in the country — as part of a larger cryptocurrency crackdown that also included legal action against Binance, the largest crypto firm in the world. The commission’s suit accuses Coinbase of functioning as an unregistered exchange, brokerage and clearinghouse.
Meanwhile, Robinhood has been facing its own challenges. The platform’s crypto trading volume in May was down 43% from the prior month and 68% from last year. Daily average trading revenue for crypto trading on Robinhood was also down in May.
Additionally, Robinhood delisted three tokens, Cardano’s ADA, Polygon’s MATIC, and Solana’s SOL, which were named as securities by the SEC in recent lawsuits against Coinbase and Binance.