Spot Fees: Top Crypto Exchange Rates, What to Know

A spot trade takes place whenever a financial instrument changes hands and is paid for immediately. If you buy or sell cryptocurrency through a spot trade, you’ll pay a spot fee to the exchange for facilitating the transaction. Spot trading isn’t just for cryptocurrencies: You can spot trade stocks and bonds, too. And not all cryptocurrency transactions are spot trades: Margin trading and futures trading, for example, are different.

For crypto investors planning to make frequent trades, finding an exchange with low or no spot fees is important because it could add up to significant savings. But if you plan to hold investments long term and make minimal trades, it might be less of a deciding factor for you.

Spot fees have largely disappeared from major brokerages when trading equities, like stock and mutual funds, but most crypto exchanges still charge them. These fees are typically a percentage of the value of each trade. A 0.5% fee on a $100 transaction would result in you paying 50 cents to the exchange. Many exchanges use tiered pricing, adjusting prices based on factors like the dollar value of all your trades in the past 30 days.

Crypto exchanges connect people looking to buy cryptocurrencies with cryptocurrency owners looking to sell. On these exchanges, it’s common to see fee rates split into two categories: maker fees and taker fees.

You pay:

• A taker fee if your order matches an existing buy or sell offer. This transaction reduces the exchange’s liquidity, or the amount of assets available to trade.

• A maker fee, which is almost always cheaper than a taker fee, if your order does not match another existing offer. This transaction adds liquidity to the exchange.

In practice, taker fees generally apply when you’re buying or selling an asset immediately, while maker fees generally apply when an order is placed in advance. Orders can be placed in advance with limit orders, which are conditional agreements that state you’ll buy or sell a set amount of an asset when it hits a certain price. Not all limit orders are charged maker fees, though; if they’re matched with an order right away, they might be charged a taker fee. To make sure you’re charged a maker fee, you can place a post limit order, which means the order won’t be matched with another order immediately when the terms are met.

Depending on the outstanding orders at the exchange, you could have a transaction in which part of the sale matches an outstanding buy or sell order from someone else and is charged the taker fee while the remainder of your order is charged the maker fee.

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Some exchanges offer tiered pricing, which results in lower rates for customers who meet certain conditions. Examples of tiered pricing include:

Volume discount: The more you trade with that exchange, the lower your rate will be. While helpful for those who use it, many of these discounts don’t begin to kick in until you’re trading five figures or more per year. Make sure the rate you’re looking at is the one you’re most likely going to be working with, not the lowest possible rate the exchange reserves for its highest-volume customers.

Trading pairs: The rate depends on the combination of what you’re buying and what you’re paying with. For example, Binance.us doesn’t charge fees if you’re buying Bitcoin with cash. But if you’re buying Bitcoin with Ethereum, there is a fee. Trading stablecoins often has lower fees than other cryptocurrencies.

Exchanges also use spreads to make money on transactions, meaning that if you’re selling crypto, you’ll get an amount slightly below its market price, and if you’re buying crypto, you’ll pay an amount slightly above its market price. While distinct from a fee in a technical sense, the end result for the consumer is the same — less money in your pocket. Some companies have a set amount they apply to all trades while others calculate it at the time of purchase.

While maker fees and taker fees are common, you might find an exchange that calculates spot fees on a trade-by-trade basis. Others might charge a flat percentage.

In addition to spot fees, you could encounter fees for:

• Paying with credit card.

• Trading on an app.

• Paying miners to verify the transaction, a cost that the exchange passes along to investors, similar to how some businesses charge a surcharge if you use a credit card instead of cash.

These aren’t spot fees, but they cost you just the same.