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Upstart crypto exchange LVL wants to take on U.S. giants Coinbase and Gemini by removing trading fees.
Announced today, LVL (pronounced “level,” as in playing field) is making its entire service free to use. LVL, which is backed by Morgan Creek Digital’s Anthony Pompliano and bitcoin advocates Jimmy Song and Willy Woo, previously had no trading fees but only for subscription users.
LVL is also partnering with Mastercard to release two debit cards in early 2021. A standard plastic debit card will be available to free-tier users for a $10 issuing fee, while a metal Mastercard is included with three months of LVL’s Premium service.
Related: Crypto.com Takes Steps Toward Financial Licensure in Malta
The new features come as bitcoin is hitting all-time highs.
“We’ve always been behind a subscription paywall but now we’re just making our entire service free to use,” said LVL CEO Chris Slaughter. “You can buy and sell bitcoin, you can use the plastic debit card. So now in North America, there’s a regulated exchange that’s 100% free to use.”
Read more: Bitcoin Trading Fees on PayPal, Robinhood, Cash App and Coinbase: What to Know
LVL’s point is that large U.S. exchanges like Coinbase and Gemini with remarkably similar pricing schemes create a lack of competition. If it takes a scrappy minnow with just $2.5 million raised to date to disrupt the monopoly effects of these crypto exchanges, Slaughter said, then bring it on.
Related: Morgan Creek CEO Says Bitcoin Doing 'Extremely Well' Due to Fed Reserve's Dollar Devaluation
“We are a super scrappy business contender by nature,” he said. “Like, we only have seven people but we have the first Mastercard approval in North America. We’re registered with FinCEN. And not only do we have bank accounts, they are full checking accounts.” (LVL also provides FDIC insurance on those accounts through banking platform Evolve, Slaughter said.)
Revenue model
The exchange makes its money, Slaughter explained, by charging $3 for withdrawals, which primarily covers network fees. (Coinbase charges a $1-$5 network fee.) The trading platform also charges $5 for same-day bank transfers and wires, which covers the exchange’s risk provisioning credit to users and generates some income for LVL, Slaughter said.
The premium service at $9 per month, which also includes live-chat facility with a banker, is the means by which LVL Autopilot brings liquidity to the platform. The system runs industry-standard market-making algorithms, providing liquidity to traders and generating passive income for the Autopilot user, says Slaughter.