Coinbase has reached a milestone that is instantly recognizable on Wall Street: it has become the only full-service prime brokerage in the cryptocurrency sector, according to its own definition. John D’Agostino, who leads strategy at Coinbase Institutional, explained that the definition of a prime broker is still based on a familiar checklist from Wall Street: trading, custody, financing, derivatives, and cross-margining, with an additional layer of staking in the crypto space.
'If you can provide all these services at scale, you're considered a prime broker,' he stated. In traditional markets such as equities and fixed income, only a handful of firms, including Goldman Sachs, Morgan Stanley, and Bank of America, qualify as full-service prime brokers. Smaller brokers may support funds but lack the comprehensive service portfolio.
'A hedge fund with $100 million in assets isn't getting the full range of services from a top-tier firm; instead, they're piecing together services from various providers,' D’Agostino explained. 'The major prime brokers offer everything.' Until recently, the crypto sector operated similarly, albeit with greater fragmentation. Funds would assemble services from multiple providers, including custody from one, derivatives from another, and financing from yet another.
'You can replicate a prime broker by combining services, but Coinbase is the only one providing all these services natively,' D’Agostino noted. As the largest U.S.-based cryptocurrency exchange and a significant infrastructure provider for institutional investors, Coinbase offers trading, custody, and financing services through its Coinbase Institutional unit. The flagship platform, Coinbase Prime, integrates these functions into a single system, allowing hedge funds and asset managers to trade, store, and finance digital assets under one roof. With over $350 billion in assets under custody, which accounts for approximately 12% of the total crypto market capitalization, and serving as custodian for more than 80% of U.S.
bitcoin and ether ETF assets, Prime has become a crucial bridge between traditional finance and crypto markets. The firm operates under a growing regulatory framework, including oversight from New York regulators. Crypto prime brokers offer institutional clients a bundled suite of services that mirror traditional market offerings, such as equities and FX, to help manage counterparty risk and access liquidity across fragmented venues. Prominent players in this space include Coinbase Prime, Galaxy Digital, FalconX, and Anchorage Digital.
The introduction of cross-margining between spot and derivatives positions in March marked the final component, enabling market makers and institutional traders to reduce capital requirements by 10% to 20%. 'That was the last pillar,' D’Agostino said. 'Now, by any standard, we're a prime broker, regardless of the asset class.' Coinbase's institutional platform processes approximately $236 billion in quarterly trading volume and supports over 470 assets across more than 20 blockchains.
Beyond trading and custody, Coinbase has a $1 billion lending book and what D’Agostino describes as the industry's largest listed derivatives footprint through its Deribit integration. Its staking business spans 10 to 20 tokens at institutional scale, including dedicated products through Coinbase Asset Management. 'Those are the core components,' he said.
'There are firms doing well in custody, others in derivatives, and others in lending, but no one is solving all these problems in one place.' This gap persists partly due to the relatively small size of the crypto market, which accounts for roughly 3% to 5% of global equities and fixed income markets, making it too small for major banks to fully commit. Instead, D'Agostino expects banks and incumbents to partner. 'Buy, build, or rent,' he said. 'Banks will rent; it's cheaper and smarter to rent the best brand than build a mediocre version.' In the long term, this calculus could change if crypto grows to 20% or 30% of global markets.
'Then you'll see full-scale competition,' D’Agostino said. 'But that's years away.' For now, the bigger threat isn't Wall Street; it's startups. 'I'm less concerned about JPMorgan than I am about the next Brian Armstrong,' he added.