Coinone Joins Digital X in Zero-Fee Crypto Exchange War

Crypto exchange Coinone has eliminated trading fees on all listed tokens in response to rival Digital X's move to do the same. This development marks a turning point in the market share contest among South Korea's cryptocurrency exchanges, which is now becoming a zero-fee game.

The move came just two days after Digital X announced that it would waive trading fees on all tokens for one year. Coinone's decision to eliminate trading fees is seen as an attempt to hold onto third place in the market and fend off Digital X, which has become aggressive since Mirae Asset Group took control.

Fees are essentially the entire revenue base for crypto exchanges. At Coinone, fee income accounted for 100% of total operating revenue last year, while at Digital X, it made up 99.99%. The picture is little different at the two market leaders: Dunamu, which operates Upbit, saw fees make up 96.9% of total operating revenue in the first half of this year, and Bithumb had effectively 100% fee income.

The exchanges' decision to forgo fee income just as a reviving crypto market offered a chance to expand it is likely to have a negative impact on their profitability. The longer these waivers last, the heavier the hit to earnings will be. As one senior financial industry official put it: 'When excessive competition among financial firms threatens their soundness, regulators can step in, but there is no equivalent regulatory framework for crypto operators.'