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Bloomberg analyst Eric Balchunas suggested that crypto exchanges might need to reconsider their pricing structures if a spot Bitcoin ETF is approved, given the low fees charged by some major players.
Caitlin Long of digital asset custody platform Custodia Bank raised concerns that low ETF fees might indicate issuers are struggling to cover costs. While seemingly a direct competitor, Long warned that ETF issuers offering fees too low to cover expenses might resort to lending securities to offset losses.
According to filed prospectuses, Bitcoin in custody will not be lent but held in cold storage. However, ETF shares themselves can be lent out with collateral backing the transaction.
An analysis of top crypto exchanges compared their fees. The table below shows transaction fees for popular crypto platforms for traders making a market order without promotional benefits like staking, native token holdings, or high trading volume.
| Exchange | Trading Fees | $100 | $200 | $2000 |
|---|---|---|---|---|
| Kraken | 0.26% | $0.26 | $0.52 | $5.20 |
| Coinbase | 0.60% | $0.60 | $1.20 | $12.00 |
| Crypto.com | 0.075% | $0.075 | $0.15 | $1.50 |
| Gemini | $0.99, 1.49% for >$199 | $0.99 | $2.98 | $29.80 |
| Cash App | 3%, 1.75% for >$199, 1.25% for >$1999 | $3.00 | $3.50 | $25.00 |
| Binance | 0.1% | $0.10 | $0.20 | $2.00 |
The following table shows the cost of holding the equivalent value of Bitcoin for one year within the proposed Bitcoin ETFs currently awaiting approval.
| ETF Issuer | Fees (bps) | $100 | $200 | $2000 |
|---|---|---|---|---|
| Invesco / Galaxy | 59 bps | $0.59 | $1.18 | $11.80 |
| Blackrock | 30 bps | $0.30 | $0.60 | $6.00 |
| Bitwise | 24 bps | $0.24 | $0.48 | $4.80 |
| Ark | 25 bps | $0.25 | $0.50 | $5.00 |
| Fidelity | 39 bps | $0.39 | $0.78 | $7.80 |
| Valkyrie | 80 bps | $0.80 | $1.60 | $16.00 |
| Grayscale | 150 bps | $1.50 | $3.00 | $30.00 |
| WisdomTree | 50 bps | $0.50 | $1.00 | $10.00 |
| VanEck | 25 bps | $0.25 | $0.50 | $5.00 |
Acquiring shares in the above Bitcoin ETFs requires using a broker. Some brokers charge custody fees, while others do not. Exchanges like Webull, eToro, and Robinhood offer zero-commission trading. In contrast, brokers like Hargreaves Lansdown, BestInvest, Interactive Investor, and ig.com charge fixed fees for U.S. ETF purchases, with some offering zero commission after a set number of trades.
This analysis assumes zero-commission trading for the proposed spot Bitcoin ETFs.
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Based on this, Crypto.com appears to be the cheapest exchange to purchase Bitcoin, costing just $1.50 for a $2,000 purchase compared to the lowest ETF fee of $4.80 if held for one year.
However, several exchanges also charge withdrawal fees. Crypto.com charges a 0.0006 BTC withdrawal fee, equivalent to $27 at press time. The average Bitcoin network fee is 0.0002 BTC ($9.45). Other exchanges, such as Binance, charge only the network withdrawal fee.
The table below shows the cost to purchase and withdraw the respective amounts of Bitcoin to self-custody using the average transaction fee as of press time.
| Exchange | Trading Fees | $100 | $200 | $2000 | Withdrawal Fees |
|---|---|---|---|---|---|
| Kraken | 0.26% | $18.26 | $18.52 | $23.20 | $18 |
| Coinbase | 0.60% | $10.45 | $10.65 | $21.45 | Network fee |
| Crypto.com | 0.075% | $27.07 | $27.15 | $28.50 | $27 |
| Gemini | $0.99 or 1.49% for >$200 | $10.44 | $12.43 | $39.30 | Network fee |
| Cash App | 3% or 1.75% for >$200 or 1.25% for >$1999 | $12.45 | $12.95 | $34.45 | Network fee |
| Binance | 0.1% | $9.55 | $9.75 | $9.75 | Network fee |
A critical difference exists between buying Bitcoin via an ETF or an exchange. With a spot Bitcoin ETF, you are exposed to the underlying Bitcoin, which is custodied for you by the issuer and its custodian (typically Coinbase Custody). However, exiting the ETF yields only cash, not Bitcoin. The Bitcoin is held in custody only while you hold the ETF shares.
With a crypto exchange, you purchase Bitcoin held by a third party. You can then withdraw the Bitcoin directly to a self-custody wallet or convert it to fiat and withdraw cash. The difference in custody is significant. If approved, spot Bitcoin ETFs will face closer and more direct regulatory scrutiny than many crypto exchanges. The 2022 FTX collapse highlighted the importance of knowing where your crypto is custodied.
As of press time, Binance is the cheapest exchange to purchase and withdraw Bitcoin into self-custody. Bitwise is the cheapest ETF to buy and hold custodied Bitcoin through an exchange-traded product, while Crypto.com is the cheapest crypto exchange to purchase and custody Bitcoin without withdrawal.
The top providers to purchase Bitcoin and have it held in custody on your behalf are Crypto.com, Binance, Bitwise, and Ark/VanEck.
This analysis is based on a single purchase using an account with no special privileges or volume bonuses. Many exchanges offer fee discounts for active traders, reducing the cost of buying and holding Bitcoin.
