It makes more sense when you consider the insane fees they get away with charging due to lack of competition in the regulated US crypto space. In a mature exchange in the normal financial markets, one might expect to pay under 0.5bps (one bp is 1% of 1%). In overseas crypto exchanges, the fee will be around 5bps. In Coinbase, it's 20-50bps.
The fees, as you explain it, do indeed seem like highway robbery. But there's something very specific about Coinbase in the US: all customers funds from american fiscal residents in USD are FDIC insured (so up to 250 K are safe). AFAICT they're the only one to actually offer this? It's also a real company, with a real address, whose owners are real people, etc.
It's not exactly the "we're convicted criminals operating from the Cayman using some shady bank" type of crypto exchange.
Looks like there is some details here https://www.coinbase.com/legal/insurance
So, should you have the desire to keep cash at Coinbase for some reason, it will actually be held at a real bank and FDIC insured.
That's what I thought as well. People complain about monopolies but these over regulated spaces make it so difficult for startups to get going. It shouldn't be necessary for a non tangible asset company to need an angel investor that pays for tons of bureaucracy and license acquisition.
There being a monopoly is not the problem, the problems are always anti trust behaviour i.e. not co-operating with the market for improvement, closing of competition by some behaviour that is not beneficial to the market.
Highly regulated markets tend to do this due the difficulty in disrupting such a market, you need to play by the existing rules and that leaves little room for manoeuvre against the incumbents, the incumbents are free from anti trust because the rules are set by the authorities, often at the behest of the incumbents of course.