Review: Coinbase

Update (10 Nov 2022):  Following the failure of FTX, we are withdrawing all our recommendations in the crypto space. Readers should not rely on anything in the post below. We are leaving the posts up for accountability but striking out all text to avoid any misunderstanding. 

The Bottom Line

Of all the exchanges we reviewed, Coinbase has operated for the longest time and has never been hacked. It has the highest spot trading volume of any exchange available to Singapore residents. It is also the only crypto exchange to be listed on a major stock exchange and has been exempted from holding a license by the MAS.

However, Coinbase is only average when it comes to the number of currencies listed on the platform and their fees are opaque and high. You cannot trade futures or get margin loans on Coinbase.

Singapore residents can only buy coins on Coinbase using a credit or debit card, or with other cryptocurrencies. Wire transfers for fiat currencies are not available.

What is Coinbase?

Coinbase is a cryptocurrency exchange based in US and operating in more than 100 countries.  Coinbase is the only major exchange to be listed on a stock exchange and it has a market value of US$37bn at the time of writing.

In 2021, they reported US$7.8Bn in revenue and US$3.1bn in profits. They have more than 89 million verified users with more than US$250bn in assets on the platform.

They have money services licenses in most US states and an E-Money license from the FCA in UK. Coinbase is also listed as having an exempt status by the MAS, which likely means that MAS has not yet decided on their license application.

Coinbase offers access to more than 160 coins on its spot platform but does not offer futures and other derivatives at this time. It is the 3rd largest crypto exchange globally based on the volume of spot transactions of US$4.1 billion a day.

How is Coinbase different from other crypto exchanges?

Long history Coinbase has been operating since Oct 2012, making it the oldest exchange we reviewed.

Security Despite the long history, Coinbase has never been hacked. They store 98% of customer funds in a cold wallet. Their Security page is fairly informative and Coinbase seems to be following all industry-standard practices for securing their system. They also offer a bug bounty program for security researchers and carry a US$255 million insurance policy for assets in all wallets.

Listed on NASDAQ Coinbase is the only major crypto exchange to be listed on a major stock exchange. This means they are subject to additional scrutiny from investors & regulators and also must disclose their financials regularly.

Limited Funding Options Coinbase does not support wire transfers for Singapore based users. The only way to fund the account with fiat currencies is through a credit card, which comes with high fees. Crypto deposits are free.

Coinbase Wallet vs. Coinbase.com vs. Coinbase Pro Coinbase offers a free wallet app called Coinbase Wallet. This is separate from the exchange and is not reviewed here.

The exchange itself offers two trading platforms. Coinbase.com is the simplified trading platform that lets users in Singapore buy coins using a credit card and has high fee. Coinbase Pro is the advanced trading platform that comes with lower trading fees and more features.

Opaque Fees Coinbase.com does not transparently disclose the fees they charge. The fees page on their website claims fees are calculated at the time of placing the order. While their fee structure appears to be consistent and we were able to get most data points we needed after a lot of digging, this makes it hard to feel confident about what they charge.

Futures & Margin Trading Coinbase does not offer any futures or other derivatives for trading. They have also stopped providing margin facility to retail traders.

Is Coinbase licensed?

Coinbase has money services licenses in most US states and an E-Money license from the FCA in UK.

Coinbase is also listed as having an exempt status by the MAS, which likely means that MAS has not yet decided on their license application.

Coinbase Trust company, which offers institutional custody services for cryptocurrencies, has a trust company license from the New York Dept. of Financial Services (NYDFS). The regulator sets out capital requirements and audits this business like any other custodian.

This is a separate business from the exchange. However, we think it shows that the group is willing to be regulated and audited, which is positive.

Is Coinbase safe?

Coinbase is the oldest crypto exchange we reviewed and the one with the highest amount of spot trading volume and a large retail customer base. Despite this it has never been hacked, which provides a great deal of comfort on their security practices.

The disclosures on their Security page are reasonable. They store 98% of customer funds in a cold wallet. They also offer a bug bounty program for security researchers and carry a US$255 million insurance policy for assets in the hot wallet.

They follow many industry standard security practices like mandatory 2 factor authentication and also support mandatory whitelisting (called allowlist by Coinbase) for withdrawals.

We also like that the related Coinbase Custody business is subject to regulation and audit by a reputed regulator like the NYDFS, although the exchange is not.

What fees does Coinbase charge?

Coinbase.com makes it hard to figure out the fees they charge.

The fees page on the Coinbase website claims fees are calculated at the time of placing the order and does not provide any details. Coinbase Pro does disclose some of their fees but not all items. We were eventually able to find most of the fee details from other sources or through reverse engineering.

Coinbase.com charges a fee of 3.99% or higher for debit & credit card purchases. This is the only option available to Singapore based users for buying coins with fiat currency. For trading one coin for another they charge 1.49% of the trade value or a flat fee for smaller amounts.

Coinbase.com also charges a 0.50% spread on all transactions, further increasing your cost.

Coinbase Pro fees are much lower as they use the maker / taker model and rates start at 0.40% for makers and 0.60% for taker and fall for those with higher trading volumes. This is higher than most other pro platforms.

We could not find data on crypto withdrawal fees or minimum withdrawal amounts. These fees usually vary by currency and were difficult to estimate.

For staking, Coinbase.com charges a 25% commission.

What coins, tools and data does Coinbase offer?

As with every other crypto exchange, both the Coinbase platforms are  focused on trading and offer very limited data or tools.

You can check prices of various coins and instruments, look at customizable charts, examine your positions, and your historical & open trades. There was no P&L report.

Some online brokers offer a fair bit of data and analytical tools to evaluate stocks. None of the crypto exchanges, including Coinbase, offer anything similar to evaluate the coins or other instruments trading on their platforms.

Spot Coverage & Liquidity Coinbase lists more than 160 coins on the platform. This includes 70 of the top 200 coins by market value and 28 of the top 50 coins. That puts Coinbase in the middle of the range for the exchanges we reviewed.

Coinbase had average daily spot trading volume of more than US$4.1bn over the last 90 days. That ranks it 3rd globally behind Binance and OKX for spot trading volume, and 1st among the exchanges open to people in Singapore.

Futures & Margin Trading Coinbase does not offer any futures or other derivatives for trading. They have also stopped providing margin facility to retail traders.

Funding For Singapore residents, Coinbase.com only offers debit and credit card purchases of coins. You cannot fund the account by wire transfer. Debit and credit card transactions are very expensive with a fee of 3.99% or higher.

Coinbase Pro account can only be funded by a fiat transfer from the Coinbase.com account or a direct crypto transfer. Therefore Coinbase only makes sense if you already own cryptocurrencies that you can transfer to your Coinbase account.

However given that most other exchanges charge lower fee than even Coinbase Pro and the number of coins available on Coinbase is not very high, there is very little reason for a Singapore resident to have a Coinbase account, if they already have account at another exchange.

This may change if Coinbase gets a license from the MAS and starts offering better funding options in Singapore, but for now it’s a big hurdle for us.

Withdrawal We found crypto withdrawals to be fairly straightforward. Coinbase does not disclose the fee schedule or minimum amounts for withdrawal, which is a problem. In our test transfers the fee charged was reasonable. However the fees vary by currency and so it is difficult to know if that is true across currencies.

Transfers between Coinbase.com and Coinbase Pro are free.

Trading  Both Coinbase.com and Coinbase Pro work very similar to how the other simple and advanced platform work (e.g. Gemini basic and ActiveTrader).

Coinbase.com only offers the option of buying & selling a coin and converting one coin to another. There are no order types and you must simply take the price being offered. You also get the option of setting up recurring buys.

Coinbase Pro offers 3 order types: Market, Limit and Stop.

Reports Coinbase Pro and Coinbase.com both let you see your open and historical trades & existing asset positions. You cannot see your P&L, daily or longer term.

Learn and earn Coinbase has this feature where you can earn coins for learning about cryptocurrencies. In our testing we got paid $4 in ETH for connecting the Coinbase wallet app to Coinbase.com and another $10 for reading 5 snippets of a couple of lines each about Stellar Lumens and answering 5 multiple choice questions.

Is Coinbase easy to use?

Coinbase.com and Coinbase Pro UI are both fairly ordinary and not very different from other platforms. You can usually figure out the common tasks quite easily because the overall functionality of the platform is quite limited.

We don’t think any crypto exchange offers a user experience that is materially better or worse than the rest. But for us the lack of transparency around fees in Coinbase.com was tough to overlook and disappointing.

How is Coinbase’s customer service?

We found Coinbase’s customer service to be in line with peers. Clicking Help in account menu gets you to the searchable support material.

You can scroll down to “Contact us” option to get an option of either calling a US/UK number or sending an email. There is also a chat bot that tries to help. We got a response to our email queries in about 8-12 hours.