Zero-Commission Crypto Trading: The Hidden Costs Revealed
The advertising of zero-commission crypto trading has become a popular feature among many platforms. However, this marketing claim is not entirely accurate as each platform generates revenue through various means.
Rightside financial news reports that several major exchanges, including Robinhood and Webull, offer commission-free crypto trading to attract retail investors. But what does it truly cost?
The SEC fined Robinhood $65 million in 2020 for misleading customers about how the platform made money from trades marketed as commission-free. The regulator's order found that the company failed to fully disclose its receipt of payment for order flow and related execution-quality issues.
Robinhood generates revenue through spreads, which can add a high cost to zero-commission crypto trades, depending on market conditions and the time of execution. The spread varies by platform, asset, liquidity, and market conditions, so the cost can differ significantly between trades.