Cryptocurrency exchanges are taking notice of the trading-fee war. Tagomi, which operates as a prime broker in the crypto space, has cut its fees by more than 50 percent to gain market share as competition piles into the crypto trading space.
The startup, however, keeps its multi-tiered fee structure, where traders get a lower rate if their transactions reach a certain volume.
Fees for crypto traders are down to 0.1% or less per trade, which Tagomi claims it saves them $25 when they buy $10,000 worth of bitcoin through its platform. According to its updated fee schedule, the startup charges a flat fee of 10 basis points for trades smaller than $1 million, down to 0.08% for volumes ranging from 1 to 10 million.
Tagomi says the aggressive cuts offer some of the lowest levels in the industry, making other crypto exchanges to have room to cut. More specifically, the new rates are nearly 70 percent lower when compared to what traders pay to the likes of Coinbase and Gemini.
Tagomi, which launched its electronic-trading service for crypto last year, is aggregating liquidity across multiple exchanges and executing trades based on a single unified order book. The broker also provides its partners with straight-through process and workflow when managing crypto portfolios and trading across many exchanges and other destinations.
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Tagomi is trying to attract bigger volumes and increase liquidity on its platform as fee compression hits all crypto exchanges. According to its latest metrics, the New Jersey-based crypto prime broker handles less than $20 million in weekly crypto volumes or about $1 billion per year.
Tagomi came on board for the institutions
While it appears to be nearing the finish line in the traditional trading industry, race-to-zero price competition is likely to happen in the cryptocurrency sphere.
Tagomi was co-founded by former HFT technologists, including Greg Tusar, global head of electronic trading at Goldman Sachs, and Jennifer Campbell from Union Square Ventures. It recently raised $28 million from Peter Thiel’s Founder Fund and Paradigm as well as others.
In an interview, Tagomi co-founder Marc Bhargava told Finance Magnates that while more retail-type exchanges are emerging, companies like Tagomi came on board for the institutions.
“But someone looking to do larger trades and wanting to do them electronically rather than calling an OTC, wanting to use more advanced algo types, wanting to do things like lending and shorting–and most importantly, wanting it done on an agency basis (meaning wanting someone to execute these trades and then post trade reports and show them how they did it in the best possible way for them–none of [those features] really existed, because it was a really nascent market,” he said.