Coinbase is the biggest US cryptocurrency exchange and one of the biggest in the world. It’s a simple and straightforward way to buy, sell, and convert around 260 cryptocurrencies. The company has millions of clients in over 100 countries.
Coinbase offers two platforms: the basic one, which is simplicity itself (limited charts, only “at the market orders”), and Advanced Trading, which offers charts through TradingView and several different kinds of orders. The company thereby caters for both beginning traders and the more advanced. The educational materials are top-notch.
It’s one of the few listed cryptocurrency exchanges in the world as it’s listed on the NASDAQ (symbol: COIN). That means it’s an audited company, which gives some measure of security. That being said, it’s had its share of controversy too. It’s currently being pursued by the US Securities and Exchange Commission for various alleged infractions. Meanwhile, it’s racked up over 6,000 complaints with the US Consumer Finance Protection Bureau (CFPB) and its rating on Trustpilot is dreadful. There have been a lot of complaints about the customer support in particular.
Fees are at the high end for the industry, but not the highest. The number of currencies you can deposit in is also limited.
Neither options nor leveraged trading are available.
Coinbase has a lot of features that will make it an attractive broker for anyone interested in the cryptocurrency world, particularly beginners.
The main attraction is the platform, which is divided in two. For beginners, the platform is designed to be as simple as possible. All you can do basically is draw a chart of the price over some time period and place an order to buy or sell at the market price. You can also store your crypto in their wallet, which incorporates a number of cutting-edge security features. More advanced traders will find most of what they need in the Advanced Platform, although it still lags behind the best in terms of how many order types are available.
In addition, it offers excellent educational materials, including an unusual “Learn and Earn” section that gives you small amounts of various coins in return for learning about them.
On the other hand, the company’s pricing is on the high side, although not necessarily the highest in the industry. Depositing money with a credit/debit card is particularly expensive. Furthermore, Coinbase’s reputation for customer service isn’t very good. It has an unusually large number of complaints about it with the US Consumer Finance Protection Bureau (CFPB) and the customer rating website Trustpilot. But if you aren’t looking for the cheapest trading in town and if you think you can take care of your account by yourself, it’s an excellent way to get into cryptocurrencies.
Coinbase Global, Inc. is the largest cryptocurrency exchange in the US. It was founded in 2012 by Brian Armstrong, a former Airbnb engineer who is still the largest single shareholder, and Fred Ehrsam. The original idea was to provide a platform to send and receive Bitcoin. The company says its mission is “to increase economic freedom in the world.” It’s named after coinbase transactions, which are special transactions that introduce cryptocurrency into circulation in proof-of-work cryptocurrencies such as Bitcoin. (This is the kind of thing that either you understand already or you probably don’t care about.)
Its SEC filing to go public in 2021 said that the company had 43mn verified users, 7,000 institutions, and 115,000 ecosystem partners in over 100 countries, with about 40% of their clients in the US and 25% in Europe (including the UK). The company currently has around 3,560 employees. The platform holds $130bn in assets and trades $145bn each quarter. Coinbase lost $2.6bn in 2022 vs a profit of $3.6bn in the previous year, mostly because of a plunge in revenue ($3.2bn vs $7.8bn).
Coinbase has proved a good starting grounds for many executives who have gone on to become influential entrepreneurs in the digital world in their own right.
It’s probably as safe as possible in this day and age. Having said that, it’s clear it’s not 100% safe – no place is when it comes to cryptocurrencies.
CCData, in its Exchange Benchmark Ratings, rated Coinbase the second-most secure exchange in the industry.
Coinbase goes the extra mile to ensure that its clients’ funds are safe. It holds all its customers’ assets 1:1, meaning that it does not lend or rehypothecate customer assets. The website uses bank-standard encryption and security. Most important, the bulk of customer assets are stored offline using what’s called “cold storage,” that is, somewhere that isn’t connected to the internet and so can’t be hacked. And all accounts have to use two-factor authentication, which prevents anyone from accessing your account unless they have your phone (you too, so watch it! Don’t lose your phone.)
Moreover, the company carries crime insurancethat it says “protects a portion of digital currencies held across our storage systems against losses from theft, including cybersecurity breaches.” However this doesn’t cover losses that happens because your password is stolen, for example.
For US users, USD cash is held in banks that are insured with the Federal Deposit Insurance Corp. (FDIC) and so is insured up to $250k per client. For non-US customers, funds are held in dedicated custodial accounts and aren’t used by Coinbase.
Finally, Coinbase is a listed company (NASDAQ: COIN) and as such is required to file audited financial statements. That means we can see its financial situation (which by the way is not so great – it lost $2.6bn in 2022). That’s a lot more than most other companies in this business, which usually have a relatively opaque structure and give no financial information. Ask people who traded on FTX how important this is. (FTX went bust in 2022 due to various shenanigans, with between $1bn-$2bn of clients funds’ missing.)
That having been said, there have been several security breaches at Coinbase, some due to sloppiness on the part of users (reusing their Coinbase password elsewhere) but one in 2021 that exploited a flaw in the cryptocurrency transfer process, which apparently affected over 6,000 users.
One technical point: Coinbase holds and controls your private keys on its main platform. That represents ownership of your cryptocurrency, which could be problematic. You can only hold your own private keys when you use the Coinbase wallet.
Crypto exchanges are not regulated. This has always been touted as one of the attractions of the crypto world, a “feature” and not a “bug.” The industry appeals to libertarian, anti-establishment people who see cryptocurrencies as a new form of decentralized money free from the crushing hand of the monetary authorities. Having the exchanges regulated by these same authorities would be contrary to this gestalt. Therefore, we can never say with any degree of certainty that an exchange is safe. We can only talk about how safe it has been up to now and what its reputation is.
No, Coinbase is not regulated. Although the website says it will “connect you to the deepest pool of liquidity of any regulated crypto spot exchange,” further down the page in tiny print it says “Coinbase, Inc. is not registered or licensed with the U.S. Securities and Exchange Commission or the U.S. Commodity Futures Trading Commission.”
This is actually a sore spot for Coinbase. As the company itself points out on its website, there is no existing way for a crypto exchange to be regulated in the US! They’ve spent a lot of their own money trying to come up with possible regulatory regimes for crypto exchanges and presented them to the SEC but have never gotten any response from the authorities. (They say they met with the SEC more than 30 times over this question.)
Looking over its international licences and disclosures, I see the words “authorized” and “registered with,” but I don’t see many instances of the words “regulated by.” It’s licensed or registered in the US, Canada, UK, Germany, Ireland, the Netherlands, Italy, Japan, Australia, and Singapore, but that doesn’t necessarily mean that it’s regulated in those areas. For example, although Coinbase Europe Ltd. is registered as a crypto service provider with De Nederlandsche Bank (DNB), the Dutch central bank, the company’s website warns that
The crypto services of Coinbase are not subject to prudential supervision by DNB or conduct supervision by the Dutch Authority for the Financial Markets. This means that financial operational risks in respect of the crypto services are not monitored and there is no specific financial consumer protection.
The one exception I could find:
CB Payments, Ltd (also trading as Coinbase) is authorized and regulated by the UK Financial Conduct Authority (“FCA”) as an electronic money institution (“EMI”) with registration number 900635.
However, that isn’t particularly significant, as the website continues:
Digital Currency Services and Additional Services are not currently regulated by the FCA, the Central Bank of Ireland ("CBI"), or any other regulator in the UK or Ireland… Your Digital Currencies and E-Money are not subject to protection under the UK Financial Services Compensation Scheme ("FSCS") or the Irish Deposit Guarantee Scheme or Investor Compensation Scheme.
Nonetheless, since Coinbase is an electronic money institution (“EMI”), E-money balances must be segregated from all other cash balances of the EMI and can’t be used for the EMI’s own purposes or loaned to other customers. That means if Coinbase should go bust, you should (eventually) be able to get your E-Money back. But it doesn’t give you access to any financial authorities if you have a complaint about the company.
In the US, the company is licensed as a money transmitter.
One safe feature: USD cash is held in banks that are insured with the Federal Deposit Insurance Corp. (FDIC) and so is insured up to $250k per client.
Yes, Coinbase is legal in the US. It’s a registered money transmitter in every state where such registration is required.
However, it currently has some legal problems. In June 2023 the US Securities and Exchange Commission (SEC) charged Coinbase with operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency. It alleges that Coinbase intertwines the traditional services of an exchange, broker, and clearing agency without having registered any of those functions with the Commission as required by law. The SEC also charged Coinbase for failing to register the offer and sale of its crypto asset staking-as-a-service program.
If you’re a US resident, Coinbase will report your earnings to the Internal Revenue Service (IRS) on Form 1099-MISC.
Coinbase Global, Inc. is a US company. It used to be headquartered in San Francisco, but during the pandemic they decided to shut the headquarters. The company is now entirely distributed; all employees operate via remote work. (On the form that they file with the SEC, under “Address of Principal Executive Offices” they say “Not Applicable.”)
The firm is listed on the NASDAQ under the abbreviation COIN.
As Coinbase is a listed company, we can answer this with some authority. Institutions are the major shareholders with 43.5%, the general public own 35% and insiders hold 21.5%, including 16.5% held by Brian Armstrong, the co-founder. The third largest shareholder, with 5.02%, is the redoubtable Cathie Woods and her ARK Investment Management LLC, a mutual fund that invests in disruptive or transformative technology.
Coinbase is part of the Russell 1000 so a lot of the institutional holdings are probably through index funds.
As mentioned above, the company takes a lot of measures to keep your money safe. It’s also begged to be regulated by the US authorities, which is a pretty unique move in the crypto industry.
Nonetheless, there still seem to be a lot of problems.
The US Consumer Finance Protection Bureau (CFPB) has received 6,237 complaints about Coinbase. About half of these were a) money was not available when promised; b) unspecified “Fraud or scam;” or c) other transaction problems. By comparison, its major competitor, Binance.US, only received 460 complaints during this period (although to be fair, Binance.US was only operating in the US from 2019) and a mainstream broker like Charles Schwab, with something like 33mn active clients, received only 662 for the whole period.
There was a big spike in complaints in mid-2017, after which the company increased its customer service staff and complaints declined. Still, there were 247 complaints in the first five months of 2023 alone or about 50 a month.
On Trustpilot, a site that lets people review companies, Coinbase has 8,332 reviews, of which only a measly 8% are 5-stars (the highest) while fully 79% are 1-star (the lowest), giving a miserable overall ranking of 1.5. Even Binance does better (an overall rating of 2.0). As I pointed out in the Binance review, I don’t usually pay attention to these scores since the websites can be gamed and disgruntled clients have much more reason to rate a company than happy clients do, but still…this is bad.
Coinbase does not offer leverage or derivatives.
Coinbase offers two kinds of accounts: Standard and Business. Business also applies to “high net worth individuals who want to accept, custody, trade crypto and more.”
There’s also Coinbase One, a subscription product. I’m not sure whether this qualifies as an “account” or a “product,” since you have to open a Standard Account anyway. In any case, Coinbase One clients pay a monthly fee instead of a transaction fee. They also get a 24/7 dedicated support team and US clients receive a pre-filled tax Form 8949 for their US taxes. It’s available in the US, UK, Germany, and Ireland, with more to come.
There’s no demo account.
Coinbase offers two pricing models:
The first is to pay for each trade you do. In this case, you pay both a fee and a spread. The fees are fixed as a percentage of volume (excluding small transactions, which have flat fees). For advanced traders, these fees are tiered as a percentage of their trading volume. The spreads you won’t know until you’re about to pull the trigger and you can see everything on the screen.
The second option is through their subscription product, Coinbase One. In this case, clients pay a monthly fee ($29.99) instead of a transaction fee. This fee covers all trading until a certain trading volume threshold is reached. However, there’s still a spread, so this might not be the great deal that it seems. It’s available in the US, UK, Germany, and Ireland, with more to come. It also doesn’t apply to Coinbase Pro or Advanced Trade.
There are no separate charges for storing assets on the platform.
The problem is, Coinbase’ fees are among the highest in the crypto industry. They start at $0.99 for a trade of $10 or less, going up to $2.99 for a trade of $50-$200 (that works out to 6%-1.5%.) For trades over $200, there’s a flat fee of 2.49%. This is of course on top of the maker-taker spread, which starts at 40 bps/60 bps and decreases the more you trade. Furthermore, it’s hard to find out exactly what the fees are until you’re about to pull the trigger.
The problem starts with depositing. It costs a lot just to fund your account: 1.49% if you pay by bank account or USD Wallet, or a whopping 3.99% if you pay by credit/debit card. Wire transfers are $10 and crypto conversion is 2%. Only ACH (automated clearing house) transfers are free. So right off the bat your account will be down anywhere from 1.45% to 3.99%.
Furthermore, there’s usually a fee for withdrawals, too (see that section).
On the other hand, there’s no inactivity fee.
There’s no fee to stake or unstake. However, Coinbase takes a commission based on the rewards you receive from the network. These commissions range from 25% for ETH, XYZ, and ATOM to 35% for ADA, DOT, and SOL. The commissions are lower if you’re a member of Coinbase One.
Coinbase has a section on its website labelled “Trading Fees and Spreads,” but all it says is:
When you preview and place simple buy and sell orders, Coinbase includes a spread in the quoted price. Spread is also included in the exchange rate when you convert from one crypto to another crypto Quoted prices or exchange rates are shown on the trade preview screen before you submit your transaction… Note that spread may differ for similar transactions.
Thanks for that! We’re much better informed now. (That’s a sarcastic comment. In fact what it means is, you have no way of knowing what the spread is going to be until you’re about to pull the trigger.)
Simply put, Coinbase trades cryptocurrencies. Lots of them. 260. That’s not as many as Binance, but it’s still a lot. I won’t bother listing them because of course they trade the major ones and there are too many minor ones to list. In any case, there are always new ones being added.
There’s also a non-fungible token (NFT) trading platform that allows you to make and sell your own NFTs as well as buy existing ones. If you want. Personally I don’t.
Coinbase does have a small futures market. They offer futures in Bitcoin and Ether, both in retail size (1/100th of a Bitcoin and 1/10th of an Ether) and institutional (1 Bitcoin and 10 Ether). Plus for some bizarre reason they offer retail-sized futures on crude oil and the Bloomberg US Large Cap Index (sort of an S&P 500 lookalike). These are denominated in and settled in USD so I have no idea why they’re on a crypto exchange.
There is no margin trading nor options.
The exchange offers a wallet that will allow you to store your crypto and NFTs in one place. It supports “hundreds of thousands of coins,” according to the company. Are there that many in circulation? The wallet also allows you to access decentralized crypto applications (or dApps) using a dapp browser.
US clients are eligible for a Visa debit card that allows you to pay for your purchases from your account on Coinbase.
Coinbase Earn allows you to earn money on 100 different cryptocurrencies by either staking them or by Defi Yield.
USD Coin (USDC): Coinbase issues its own stablecoin, USD Coin, which is linked 1:1 to the US dollar. The company says that it’s “backed by dollar denominated assets held in segregated accounts with US regulated financial institutions.” Coinbase clients with US dollar accounts may exchange 1 USDC for USD 1.00 and vice-versa on Coinbase (not available in all jurisdictions). USDC runs on Ethereum, a decentralized, programmable blockchain. You can buy USDC on Coinbase and hold it in an Ethereum compatible wallet. You can then send it without needing a bank account, thereby avoiding expensive bank fees and slow bank transfer times.
There are no fees for transferring a US dollar to USDC on Coinbase.
There are a bunch of features for institutions and merchants that want to use or accept cryptocurrencies, but we aren’t going to go into those.
Opening an account at Coinbase is similar to opening one with any other US brokerage. You’ll have to go through the whole KYC routine, including, if you’re a US citizen or resident, submitting the following information:
Furthermore, all US customers who want to send and receive cryptos and NFTs on to the blockchain are required to:
So please don’t imagine that this is going to be the way you can use cryptocurrency to hire a hit man on your wife! On the contrary. But on the other hand, Coinbase will provide you with the tax documents you need to file every year to keep you in compliance with the law.
There’s no minimum deposit at Coinbase.
One problem with Coinbase: depositing money is expensive. Some of the costs are:
Debit/credit card is the fastest but it’s really expensive. (Note though: some other crypto exchanges are even more expensive. I guess everything is relative.)
Coinbase accepts the following currencies: USD, EUR, GBP, CAD, and SGD. Maybe , MXN and CLP too. However not all regions can use all currencies. Eurozone clients for example have to use EUR.
You’re required to set a weekly limit on how much you are going to buy and sell. If you’ve linked your credit card to Coinbase, you can buy up to $1,000 of crypto every week. But if you’re a verified US resident with valid credit and debit cards, you can transact up to $50,000. The longer you are a client, the looser these restrictions become.
Coinbase charges you to deposit money and charges you to withdraw it.
This is on top of a 1.49% commission to change your crypto back into fiat.
You can avoid many of these charges though by transferring your money to your wallet in Coinbase Pro, and then withdraw them from Coinbase Pro. However, that does incur network fees. Nothing in life is free. Not even love. (As mentioned below, Coinbase Pro is being phased out for Coinbase Advanced Trade. I don’t know what will happen when that transition is complete.)
Coinbase requires you to set a buying/selling limit weekly. And, if you have linked your credit card to Coinbase, you can buy crypto worth up to $1000 weekly.
Likewise, if you’re a verified US dweller with valid credit and debit cards, you can transact up to $50,000. And Coinbase can expand your transaction limits based on how long you’ve used the platform.
The firm also says that “there may be withdrawal limits.”
Coinbase’s platform is very popular. In fact toward the end of 2017, its mobile app was the most popular download on the Apple App Store.
The basic Coinbase platform is available on a desktop (web-based) or Android/iOS mobile version. It’s quite simple to navigate. You can see your Coinbase portfolio on the main dashboard and deposit money, buy and sell coins with currency (aka “fiat”), and convert one coin into another. The charting is very basic, it only shows the price trend over various time periods (the last hour, day, week, month, or year) without any detailed analysis. Nor can you use advanced tools, such as an API.
The platform consists of the following sections:
On the basic platform you can only place market orders, aka “standard buys” in crypto-speak. These are orders to buy at whatever price the trade can be executed at ASAP. There is a facility for placing regular orders on a daily, weekly, or monthly basis.
The mobile version offers all the functionality of the browser-based version.
Coinbase Pro/Coinbase Advanced Trade
The more advanced version of their platform has been known as Coinbase Pro, but from November 2022 they began migrating to a new platform called Advanced Trade. As you might expect, this is a more advanced platform with more advanced tools, such as a few different kinds of orders (market, limit, and stops); charts from TradingView; and access to API. (Some other crypto platforms offer a greater variety of order types.) This too is available as either a browser-based platform or mobile for Android & iOS.
Login and security
The first time you log in, you have to go through two-step authentication. After that you can just log in with your password.
Not many trading tools. As mentioned above, Advance Trade includes TradingView. That’s about it.
No social or copy trading features.
Coinbase’s educational program is excellent. There’s a “tips and tutorials” section. There’s “crypto basics,” with 11 articles on “What is cryptocurrency?,” “What is a blockchain?,” etc. This also has an extensive glossary explaining 32 crypto terms. There’s a “Market Update” section that explains “the news and events behind the latest market moves.” On a similar vein, you can sign up for a weekly newsletter, Coinbase Bytes, which explains the week’s crypto news.
Most interesting of all, there’s a “Learn and Earn” section, where you watch a video about some coin, complete a quiz about what you just learned, and receive a present of $3-$15 worth of that coins.
Coinbase also has 351 videos on its YouTube channel. This includes a number of videos with the firm’s CEO and co-founder, Brian Armstrong.
The articles and videos are well done and easy to understand, well, as easy as it is possible to make cryptocurrency concepts.
There are a number of ways to get support on Coinbase:
There’s no phone support except if you think your account has been compromised, in which case you can call them to lock it.
Customer support seems to be the Achilles heel of Coinbase. As mentioned above, the company has an extraordinarily low rating on Trustpilot, with many complaints about poor customer service, as well as lost funds and frozen accounts, which might be easier to sort out if they could just speak to someone.
Yes and no.
Yes because it has an excellent platform for beginners: a simple, straightforward platform designed to be as easy to use as possible. Plus you have the option to move up to a more advanced platform easily as you move up the learning curve. Yes because it offers all the coins you could want. And yes because it has an excellent educational program. As a result, many many crypto traders have started out with Coinbase (and many of them have stayed with it, too).
No because the customer service isn’t that reliable. If you run into a problem there’s no guarantee that someone will be available to solve your issue. Also, I’m concerned by the large number of complaints and negative reviews of the company. Plus the company’s current legal problems with the SEC are disconcerting. That could cause trouble for US clients, at least.
On the other hand, if you’re a fairly self-reliant person and you’re not going to be putting you life’s savings into crypto, then Coinbase is probably as good a place to start as any and a lot better than many. Just remember that the whole crypto industry is still the Wild West of the finance world and things may be a bit more complicated than you’re used to so far.
Regardless of how or what you trade, the broker you choose should be safe to use, affordable, and offer everything you need to trade at your best. That’s why we’re highly selective. We only feature brokers regulated by a trusted authority and we make it easy to compare their fees & features, so that you can make an informed choice.
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