Let’s be clear right from the beginning. There is no such thing as trading without fees under blockchain laws. You may see plenty of zero-fee promotions, but these deals are usually full of unpleasant surprises.
As cryptocurrency trading is becoming a mainstream investment area, you should know the basic fee system that most marketplaces follow. The thing is that crypto exchange fees are different from blockchain-imposed fees. So, while it’s a dead end to hunt for a free exchange, we can play smart and find an affordable platform that balances all crypto-related fees well.
That said, there are a few types of crypto fees that I’ll cover in this compact guide. In addition, I’ll go through the most favourable crypto exchanges and discuss all the important fee factors you need to consider when choosing your next crypto destination.
Types of Crypto Exchanges
The number of circulating crypto exchanges exceeds 400. Each of them promotes its own fee policy, but on a fundamental level, crypto exchanges fall into two main types: centralized crypto exchanges (CEXs) and decentralized crypto exchanges (DEXs).
Centralized Crypto Exchanges
CEXs are the largest marketplace for trading crypto, even though their operational model contradicts the decentralized nature of cryptocurrencies. Centralized exchanges work as all other virtual money transmitters. They need to be regulated in the country where they’re registered and implement all the applicable AML/CFT rules.
Their resemblance with traditional platforms contributed a great deal to the development of the entire crypto industry. The blockchain is an unfamiliar area to the general public, so it’s normal for people to feel reluctant to invest in something they don’t know. But CEXs have made the process of buying Bitcoin at the same level as making an eBay order — create an account, deposit fiat (CAD, USD, EUR, etc.), place the order, and get the money. Or, you can go the other way around — deposit your crypto, sell it, and cash out the money.
Translated in fees, you have to consider trading, deposit, withdrawal, and transaction fees, which are defined by the blockchain regardless of the exchange fee policy.
Certainly, there are centralized crypto exchanges that offer more advanced trading options, such as derivatives trading, lending, and margin trading. Each has a determined fee schedule for these markets under the industry standard.
Decentralized Crypto Exchanges
DEXs are another story. They are closer to the original blockchain principles allowing users to trade without an intermediary. DEXs provide a platform where buyers and sellers can find each other based on selected criteria (type of crypto, amount, payment method, etc.) and execute the transaction in a peer-to-peer (P2P) manner.
Theoretically, DEXs have achieved the blockchain goal — to throw away centralized establishments from their operational scope. However, traditional decentralized exchanges have faced a crucial problem: maintaining liquidity.
With the rise of automated market makers (AMMs), DEXs seem to overcome the liquidity issue. AMM DEXs use an underlying protocol that allows users to contribute to the exchange liquidity with their funds and get rewarded for that. However, this approach is possible only for Ethereum (ETH) and Ethereum-based tokens, not for commercial blockchain products like Bitcoin (BTC), Litecoin (LTC), Dogecoin (DOGE), Ripple (XRP), etc. More importantly, they’re not a suitable environment for fiat-to-crypto transactions at all.
For you as a potential trader, DEXs do require some blockchain and DeFi background, which doesn’t mean that new-age AMM platforms aren’t user-friendly. In terms of fees, AMMs also charge a flat trading fee. The generated revenue is sent to the respective liquidity reserves so that liquidity providers (LPs) get a payout depending on their contribution to the liquidity pool. Since most protocols are built on top of Ethereum, users should always count on gas fees (the Ethereum transaction fees), which are one of the most expensive in the industry.
In this article, I’ll focus on the fees that arise from using a centralized exchange. After all, they are the most common path for beginning your crypto career.
Types of Cryptocurrency Fees
As I said, there are different types of fees you should bear in mind before your first crypto trade. And, even though the standard average is clearly defined in this industry, it’s unbelievable to what extent fees can differ on certain exchanges.
For starters, you should know that centralized exchanges can work either as crypto brokerage services or crypto trading platforms. Sometimes the exchange offers the two options as separate markets to suit the needs of all types of traders.
Crypto brokerages are tailored for beginners or for users that need instant service. They are designed as simple buy-and-sell platforms where you can complete a transaction in a few clicks. Here, you don’t need to fund your exchange account first, place an order, and wait for a response.
No, crypto brokers execute the order immediately, and for the most part, they act as sellers. You buy your coins from the exchange, not from fellow crypto players. That’s why fees on these exchanges are drastically higher than standard crypto platforms. Trading fees on centralized crypto brokers usually start from 1% per transaction and can go up to 5-6%.
Crypto Trading Platforms
Crypto trading platforms use an order-book system where you can place different types of orders and monitor the market on various charting tools integrated within the platform. Some exchanges impose a fixed fee, but some lower the trading fee amount as the trading volume of their users rises.
Also, exchanges with so-called flat fees don’t differentiate between makers and takers. If you haven’t heard before, makers are those users who place orders and enhance the exchange’s liquidity. On the other hand, takers respond to already existing orders, i.e., they take liquidity from the exchange.
Pro-oriented crypto exchanges usually feature a maker-vs-taker payment system to encourage liquidity providers. In such systems, maker fees tend to be lower than taker fees. Moreover, you can come across a situation where maker fees show a negative percentage — -0.15 %, for example. This means that the exchange offers a rebate for those who play the maker role.
Finally, we should mention the spread as a separate type of fee. It’s the percentage difference between the buying and the selling price of certain crypto. On deeply liquid exchanges, it’s usually an insignificant amount, but it can make a difference in the outcome, especially if you trade large amounts frequently. Crypto exchanges that promote a no-fee policy usually profit from high spreads, which can go up to 2% and more.
Deposit and withdrawal fees become an issue when fiat currencies are included, as they depend on the payment methods. For that reason, if you’re looking for a way to buy Bitcoin or other altcoins and tokens, native crypto exchanges are the best solution. They’re designed at the entry level and adjusted to the locally-accepted payment options. As such, many locally-based crypto exchanges don’t charge any deposit fees when using your bank account either through wire transfers or local e-payment channels.
On the other hand, international deposits (SEPA, SWIFT, etc.) come with a pre-defined fee. Credit and debit cards are increasingly popular fiat options, but they’re more often used for instant crypto purchases rather than funding your exchange account. Regardless of the purpose, card payments are substantially more expensive than any other available option.
Crypto transfers from another crypto exchange or external crypto wallet are free almost without exception.
There are very few cryptocurrency exchanges that won’t charge you for cashing out your crypto funds. I have the impression that fiat withdrawal fees are the most variable cost in the entire trading process. So, check them out carefully. While somewhere withdrawals are free or come with an insignificant fixed amount, some exchanges can charge you up to 2%-3%.
Similar to deposits, CEXs don’t usually charge withdrawal fees for cryptocurrencies. Those who do label an individual withdrawal fee to each supported crypto. However, transferring out cryptocurrencies incurs transaction fees, imposed by the blockchain itself to cover the costs of network participants. On the Bitcoin blockchain and other Proof-of-Work networks, transaction fees are called mining fees, while Ethereum charges gas fees. They are also strikingly variable depending on the current network congestion and other external factors.
Best Crypto Exchanges to Buy Cryptocurrency With Low Fees
Now that you know what to expect when trading Bitcoin and other crypto assets, let’s see how the best cryptocurrency exchanges available in Canada compare. Remember that a low trading fee doesn’t mean a favourable trade. You should do the math once you gather all expenses in one place.
Bitbuy is the overall Canadian winner for the best crypto package. It offers an incredibly user-friendly interface where you can buy and sell around 20 popular digital assets against CAD. The exchange works on highly regulated grounds to ensure the impeccable safety of user accounts and funds. It’s recognized for its exceptionally reliable customer support and hassle-free deposits and withdrawals, tailored for the Canadian-only crypto community. You can access the Bitbuy platform from its official website or download the top-notch mobile app, available for Android and iOS devices.
When it comes to fees, Bitbuy is a typical example of what I call a good deal. Instant purchases aren’t treated like a brokerage service, costing only 0.2%. The trading fees on the Pro Trade platform range between 0.1% and 0.2%. CAD deposits are free if you use a wire transfer or Interac eTransfer, but credit/debit card purchases are carried through a third-party provider and cost 6.5%.
Fiat withdrawals aren’t free on Bitbuy. If you cash out your crypto through a regular wire transfer, you’ll have to pay 1% and 1.5% if you use Interac eTransfer. On the other hand, the exchange doesn’t charge anything for crypto withdrawals.
NDAX doesn’t provide two separate markets for instant purchases and spot trading. Instead, this Calgary-based exchange features a state-of-the-art platform that is easy to use even if the trader lacks crypto experience. Experienced crypto traders can upgrade their boards with more sophisticated technical analysis tools and advanced order types. This makes NDAX one of the best crypto solutions in Canada.
The exchange features an exceptionally fair fee system. It charges a flat fee of 0.2% for all in-platform purchases and sales. CAD and crypto deposits are free, while fiat withdrawals come with a fixed fee of 4.99 U.S. Dollars. If you want to transfer crypto from NDAX to another exchange or a wallet, check the blockchain fees on the exchange’s official website.
Binance is a global leader on the crypto scene by all means — market cap, liquidity, trading volume, traffic, and trading diversity.
The exchange offers a multifunctional platform with myriad crypto opportunities, including a fascinating spot market with over 600 different assets, an advanced futures market, mining pools, staking options with over 80 different cryptos, a P2P platform, an OTC desk, and many more.
Binance enhances its full-featured set with incredibly low fees. Trading on the spot market incurs a 0.1% trading fee, which is considerably lower than the industry standard. The exchange has adjusted its deposit system to the majority of operating countries, so Canadians can deposit funds through a bank transfer for free. On the other hand, there is a flat fee of 1% attached to each fiat withdrawal on Binance.
You’ve probably heard of Coinbase — one of the world’s most famous destinations for instant crypto purchases. Coinbase has been present on the market since 2012 and, together with Kraken and Gemini, established regulated standards for crypto trading.
However, unlike these two, the original Coinbase doesn’t offer a spot-trading platform to demonstrate your trading skills. Here you get a simple one-click panel to buy around 40 different digital currencies using a suitable and locally-approved payment method. On Coinbase, Canadians can buy crypto with their debit cards. As such, this exchange is one of the more expensive crypto alternatives, as these transactions cost 3.99%.
The Coinbase company has created a separate crypto trading platform that offers a highly advanced trading package for professionals with the same level of user protection. The Coinbase Pro features drastically lower fees than the original brokerage platform, which is pretty competitive for the trustworthy service you get.
Coinbase Pro features a highly scalable trading fee structure. Trading fees vary depending on your 30-day volume and maker/taker position. So, depending on the volume, maker fees range between 0.4% and 0%. Taker fees start from 0.6% and can go down to 0.05%. Remember that to qualify for the highest tier, your trading volume needs to exceed the amount of $400 million. However, there are 9 different tiers to encourage large-scale trades, so you don’t have to aim at this mind-blowing threshold.
A Few Words Before You Go…
I don’t need to remind you that you don’t always have to lurk for the lowes-fee deal, but if you’re planning to trade actively, a fee-favourable crypto exchange is a must. In some way, the market is saturated with tons of different platforms, so they promote themselves on account of low fees. Although you can benefit from the fierce competition because of the exchanges’ fee race, sometimes you can fall for a rip-off or a scam that promises a 0% fee.
And, if you ask me, new users need to focus on other factors before fees — security, regulations, ease of deposit, processing times, and customer support. As I already said, fees become crucial a few transactions later. Fortunately, the Canadian market can offer crypto exchanges that perfectly combine all criteria for a positive crypto experience.