According to reports, the popular crypto exchange Bitstamp, which initially planned to charge an inactivity fee, has now later decided against it after user uproar.
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What is Bitstamp?
Bitstamp is one of the oldest cryptocurrency exchanges that claims to be the original exchange and has been the cornerstone of growth for the industry since its inception.
Founded by Nejc Kodrič and Damijan Merlak, Bitstamp was created to serve as an alternative to the then top Bitcoin exchange Mt. Gox. Currently based in Luxembourg, the prominent exchange was launched way before its current contenders in 2011.
Bitstamp has proved itself to be one of the most regulatory compliant exchanges to carry out business in the space and has been constantly appreciated for the same.
However, it provides a limited and set number of cryptocurrencies for deposit or withdrawal. With Bitstamp, users can execute transactions and actions efficiently through its web platform, mobile app or APIs without risk of error or security concerns, the company claims.
The organization is backed by huge venture firms like Broslyn Capital, Pantera Capital and Cognisa Capital and caters to more than 4 million users all over the world currently. The company trades in US dollars, but accepts fiat deposits free of cost only through the Single Euro Payments Area, a mechanism put in place for transferring money among European Banks.
Why Introduce the Inactivity Fee?
Cryptocurrency exchanges primarily earn income through the transaction fees that are levied on every trade made by a user. While there are other means too, the main source of income for these organizations is transaction fees only.
A steady decline in prices means an outflow of cryptocurrency or reduced interest in trading which means lesser income for the company. However, sustaining the exchange is still a matter of importance for the exchange. But with the shortage of income, this becomes an issue. This exact problem was addressed by Bitstamp as they announced their plans to levy a fee for inactive traders.
The criteria basis which Bitstamp was looking to charge the fee was inactivity for more than 12 months and a total account value of fewer than $204. The amount decided on was $10.17 per month. Bitstamp at the time justified this action by saying that keeping inactive accounts on the books was a cost.
Several exchanges like OKcoin took advantage of this opportunity to reassert their loyalty to customers by tweeting about never levying such kind of fee in the future, assuring users that their exchange was a good place to HODL.
Customer Uproar Made Them Overturn the Decision
Bitstamp updated the information on their website on Thursday stating that the decision will not be carried out after all. This was following a continuous stream of criticisms and dismay shown by the users of the platform.
Bitstamp wasn’t the first exchange to plan this fee structure too. eToro already has an inactivity fee set on their platform. However, the Bitstamp community weren’t glad about this decision as they made it clear on several media platforms like Twitter and Reddit.
The announcement came as a callout to their customers, assuring them that the company was customer-oriented at its core. The CEO of Bitstamp said, “We have heard the response from our customers to the inactivity fee, and have decided to cancel the decision after taking everyone’s concern on board”. He also added that listening to their customers was a part of their(Bitstamp’s) DNA.
What the Future Holds?
Centralised exchanges (CEX) and Decentralized exchanges (DEX) have both been subject to heavy financial crises as indicators point to a cold bear market. With a steady decrease in volume activity or the overall drop in cryptocurrency prices, organizations are left to wonder what the next move could be, or how to overcome this adverse scenario.
Several instances like the mass layoffs in cryptocurrency companies, several exchanges pausing trades and withdrawals etc are all part of a collective effort to sustain the respective exchanges or organizations. However, it doesn’t always bode well with the users or community associated with the companies.
These policy changes or voluntary actions have increased recently, and have been inciting a lot of negative comments and confusion within the industry. While companies claim to be incentivised to do this for the sake of surviving in the current market conditions, users or investors have now taken over several media outlets to assert their views and opinions against the said policies.
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The latest entrant to these incidents was Bitstamp, which initially planned to charge an inactivity fee, has now later decided against it after user uproar. It is to be seen what the future holds in the crypto sphere.
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