In crypto trading, as in life, there are fees that must be paid. We expect this – it’s how the services we utilize generate revenue after all, enabling them to continue operating as a business. In the context of government, the taxes we pay ensure the potholes in our roads are repaired and keep our hospitals operational. In the context of crypto, meanwhile, the trading fees we pay recompense market makers who provide the liquidity and the exchanges who provide the infrastructure on which we trade.
While fees are unavoidable, they are at the very least negotiable. You can’t avoid paying trading fees – unless you’re a crypto whale trading millions of dollars, in which case they can drop as low as zero – but you can certainly mitigate them. All it takes is shopping around till you find an exchange whose fee structure aligns with your preferences. This is how the free market works after all. Exchanges are in competition with one another and thus are incentivized to keep fees low enough to attract custom.
Understanding spot trading fees is the key to saving money on every trade you make. And we’re not just talking about a little money either – over the course of a year, the difference in fees imposed across different exchanges can add up to a serious chunk of your portfolio.
Unpacking Spot Trading Fees
It’s obvious why low spot fees are desirable because they compound over time and thus, over the course of thousands of trades, they can equate to hundreds of dollars. A 0.1% fee sounds tiny in isolation, but if you’re turning over your portfolio frequently, that fee is applied to every buy and every sell, which adds up to meaningful money.
That said, there are some scenarios where spot fees are less important when shopping around for a suitable crypto exchange. If you DCA a few times a year, for example, fees are almost an afterthought. If you’re trading weekly, however, and rotating between assets, fees become a primary consideration since they directly reduce your edge.
To illustrate this, if your trading strategy has, say, a 5% expected annual outperformance before fees and you’re bleeding 1-2% a year in trading costs, you’ve just sacrificed 20-40% of your edge. Low fees help you keep more of what you’re already earning. It’s also worth noting that fees are charged on volume – not on profits. You pay them whether your trade works or not and thus high fees deepen drawdowns and make it harder to recover.
In summary, low spot fees don’t just “feel nice” – they change the economics of trading. Now we’ve clarified that, let’s take a closer look at some of the most competitively priced spot exchanges at your disposal.
Competitively Priced Spot Exchanges
BitMEX
BitMEX is probably best known for its derivatives and for its rock-solid security. But it doesn’t often receive the credit due for another area where it excels – spot trading fees. The veteran exchange has aggressively lowered its spot trading fees, aiming to compete with the lowest-cost CEXs on the market and as a result its spot platform now boasts a very competitive fee model designed to reward high volume traders.
The standard rate for even the smallest traders is 0.1% for both maker and taker orders, while for high-volume VIP traders or those staking the native BMEX token, fees can go even lower. At the top end of the scale, for traders slinging serious weight, fees drop to as little as 0.045%. This tiered structure ensures a fair deal for ordinary traders while sweetening the deal for high-volume professionals.
Kraken
Kraken has long been recognized as a trusted and security-focused exchange, and its professional trading platform, Kraken Pro, offers competitive, volume-based fees. But if you’re a retail user looking to simply execute a few swaps each month, Kraken’s primary platform offers an unusual fee structure that’s ideal for low-volume traders. There’s a 1% fee levied but this is waived for Kraken+ members swapping no more than $10,000 per month.
On Kraken Pro, meanwhile, maker fees start at 0.25% and 0.4% for takers, and these drop further for more serious traders – as low as 0.00%-0.25% for makers and 0.08%-0.40% for takers. Kraken simplifies its fees by setting rates based on your rolling 30-day trading volume. FX pairs have a separate, aggressive fee schedule that can be as minimal as 0% maker and 0.01% taker for basic users.
Binance
Binance remains the largest global crypto exchange by volume and boasts a fee structure that is highly competitive, while its deep liquidity also helps profitability by reducing slippage. The default fee for all spot trades is 0.1% for both maker and taker orders, and given the wide range of crypto assets Binance supports, it’s easy to see how the exchange has come to dominate the trading landscape.
The simplest way to reduce your fees further on Binance is by holding and using the native BNB token to pay for fees, which grants a universal 25% discount, dropping the effective rate to 0.075% for both sides of the trade. Binance also frequently runs zero-fee promotions on certain pairs including BTC/TUSD and ETH/TUSD, making it completely free for those trades. For institutional clients and high-volume traders, meanwhile, the VIP tier system offers rates that drop close to zero.
Coinbase
Coinbase, the largest U.S.-based regulated exchange, has two different fee systems. Its simple “Buy/Sell” platform charges high, flat fees and includes a spread. However, serious traders can access Coinbase Advanced Trade, which uses a far more competitive maker-taker schedule. To really benefit from low Coinbase fees, though, you need to be an institution or whale that’s trading with size.
The Advanced Trade fees are volume-based, generally starting at 0.4% maker and 0.6% taker for volume under $10,000 in 30 days. While this starting point is higher than competitors outside the U.S., it drops rapidly as volume increases, getting as low as 0.% for high-tier users, making it one of the most competitive options for traders who require a highly-regulated U.S. platform.
KuCoin
KuCoin is prized for its vast range of altcoins and its propensity to list the latest tokens faster than most other tier-1 CEXs, but it also scores well when rated for trading fees. The exchange offers a default fee that is identical to Binance’s standard rate of 0.1%, but just like Binance it uses its native token to reduce this baseline further.
Traders who hold and utilize its native asset, KCS, will receive a 20% reduction on fees, dropping the effective spot rate to just 0.08%. Moreover, climbing the platform’s tiered fee structure is possible either through maintaining a high 30-day trading volume or by holding increasing amounts of KCS. As a result, KuCoin can hold its own against the largest global spot exchanges.
Save a Little to Save a Lot
Spot trading is ultimately a game that rewards high volume traders. This doesn’t mean you need to be executing huge orders to take advantage of maker/taker discounts however. If you’re trading frequently, cumulative volume can still amount to a serious dollar amount. While a 0.1% fee might seem negligible, the cumulative effect of hundreds of trades can quietly erode gains. This is particularly true in volatile markets, where low fees can be the difference between breaking even or booking a loss.
For this reason, it pays to heed fees. They might not make much difference over the course of a few trades, but over time, the difference between a 1% and 0.1% fee can equate to thousands of dollars. You don’t need to understand every facet of crypto trading to generate a profit. But you must have a grasp of how maker and taker fees work. Choosing a low-fee spot exchange is the simplest thing you can do to improve your PnL. Go grasp that low hanging fruit and stop paying over the odds for the cryptocurrencies you trade.