Why Binance’s no-fee promise goes above and beyond Robinhood’s

Binance.US is on a mission to use a zero-fee approach by taking crypto trading market share away from popular names like Coinbase and Robinhood.

Binance.US CEO Brian Shroder told Insider’s global editor-in-chief Nick Carson last week that there’s a big difference between the zero bitcoin trading fees it charges and other firms that advertise zero fees, like Robinhood.

In an effort to attract more users to its platform, Binance.US launched zero-fee bitcoin trading on its platform last week. Like Robinhood, as the company doesn’t charge a trading commission for bitcoin, nor does it participate in payment for order flow.

As it represented more than 75% of its revenue in the first-quarter of 2022, Robinhood counts payment for order flow as its main revenue driver.

“What they say is, there’s no fees. But what I think most people don’t realize is there’s a hidden fee in the spread itself. This is why what we’re doing is so different because we’re doing zero fees on our actual spot order book itself,” Shroder explained at the Toronto-based Collision conference.

This  means that users of Binance.US are directly trading bitcoin directly with other users on the platform, which means that the crypto exchange is not directly involved in bitcoin trades on its platform.

“There is no hidden revenue, there is no spread for Binance.US, and there is no fees on it, so it’s a very unique proposition that we’re coming out to market with,” Shroder said, further adding that it could to roll out its zero-trading fees to other coins on its platform over time.

“We will study it. We will look to see how our customer base responds to it. How new users respond to it. How institutional traders respond to it. And based on that response we will look at exploring other areas,” Shroder said.

So if Binance.US offers zero-fee trading crypto offering, how does it make money?

“We make money on the other 100+ trading pairs we have. And this month we’re making money on staking… so we’re diversifying our revenue base, [and by doing that] it gives us more opportunity to give back value to end customers,” Shroder said.