Coinbase has achieved a milestone in the crypto industry by becoming the only full-service prime brokerage. According to John D’Agostino, head of strategy at Coinbase Institutional, the company's definition of a prime broker aligns with Wall Street standards, including trading, custody, financing, derivatives, and cross-margining, with an additional layer of staking in crypto.
D’Agostino noted that only a handful of firms in equities and fixed income, such as Goldman Sachs and Morgan Stanley, qualify as full-service primes, while smaller brokers can only provide partial services. In crypto, funds previously had to piece together services from various providers, but Coinbase now offers all of these services natively. The company's flagship platform, Coinbase Prime, bundles these functions into a single system, allowing institutional investors to trade, store, and finance digital assets under one roof.
With over $350 billion in assets under custody and serving as custodian for more than 80% of U.S. bitcoin and ether ETF assets, Coinbase has become a key bridge between traditional finance and crypto markets.
The firm has recently added cross-margining between spot and derivatives positions, reducing capital requirements for market makers and institutional traders. D’Agostino expects banks and incumbents to partner with Coinbase rather than competing directly, at least until crypto grows to a larger percentage of global markets.
The main threat to Coinbase's position is seen as coming from startups rather than established financial institutions.