Bitfinex Waives All Trading Fees, Volume Jumps 160% in 24 Hours

Bitfinex, a crypto exchange linked to the stablecoin issuer Tether, has introduced zero fees to all its trading services.

This move means the exchange charges no maker or taker fees for spot, derivatives, or margin trading. The zero-fee policy also applies to securities trading on Bitfinex Securities and over-the-counter (OTC) trading done through the crypto exchange.

Bitfinex Implements Zero-Fee Policy

Bitfinex explained in its announcement that the zero-fee policy is not a short-term promotional activity. Instead, it is a long-term strategy aimed at benefiting existing and new customers using the exchange. The platform’s chief technology officer, Paolo Ardoino, commented on the move, saying:

Notably, the latest slash of trading fees demonstrates Bitfinex’s comeback after suffering a staggering security breach in 2016. It lost 119,755 BTC, worth $72 million at the time, to hackers. The hackers have been apprehended and sentenced to prison.

The crypto exchange clarified that the zero-fee structure does not apply to certain services. For instance, deposit/withdrawal fees, margin lending, and funding fees are not included in the policy.

The new policy also implies that participants in the Bitfinex Affiliate Programme will no longer receive commissions when those they refer trade on any of the services covered by the zero-fee structure. However, if referrals use any Bitfinex service that has fees, such as the margin lending, affiliates will receive earnings.

Recognizing that zero-fee structures can encourage wash trading, Bitfinex noted that it has implemented “a robust existing risk monitoring system overseen by a skilled risk management team” to curb such practices.

Most crypto exchanges depend heavily on trading fees to generate revenue to run their business. Since Bitfinex is waiving its fees, many onlookers may wonder how the exchange intends to raise revenue to run its operations. Clarifying this, the crypto exchange stated that it would depend on other revenue streams, such as withdrawal fees and fees for specific capital markets activities.

Bitfinex’s Trading Volume Soars

Bitfinex admitted that introducing a zero-fee structure will enable it to see higher trading volumes and deeper liquidity across key markets.

In less than 24 hours, this has proved true. According to on-chain data from CoinGecko, the crypto exchange’s daily traded volume soared by 160% to nearly $612 million today.

While Bitfinex’s rapid growth is applaudable, it is still a far cry from leading crypto exchanges like Binance, Bybit, and OKX. Bitfinex currently ranks #34 among crypto exchanges by daily traded volume.

Another Charles Schwab Moment Incoming?

In October 2019, Charles Schwab, an American investment services firm, introduced a zero-fee structure for its key services. Although this move initially caused a decline in its common stock’s price, it eventually soared.

Rival brokerage firms like TD Ameritrade and E*Trade, that depended on high commissions to run their businesses, followed the trend and significantly dropped their fees. Within a year, Charles Schwab acquired TD Ameritrade. Around the same time, Morgan Stanley completed the acquisition of E*Trade.

A similar trouble may be looming for crypto exchanges that depend heavily on fees for their revenues. If investors flock to Bitfinex, some of these exchanges may be forced to reduce theirs as well or ultimately succumb to a merger or acquisition.

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