Coinbase has achieved 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 criteria. John D'Agostino, the head of strategy at Coinbase Institutional, notes that the definition of a prime broker remains consistent with traditional Wall Street standards, encompassing trading, custody, financing, derivatives, and cross-margining, with the added element of staking in the crypto space. 'If you can deliver all of these services at scale, you qualify as a prime,' he explains. In the realms of equities and fixed income, only a select few firms, including Goldman Sachs, Morgan Stanley, and Bank of America, meet the criteria for full-service prime brokers, according to D'Agostino.
Smaller brokers may support funds but lack the comprehensive suite of services. 'A $100 million hedge fund can't get everything from a top-tier firm; they have to piece it together,' he says. 'The major primes offer the full range of services.' The cryptocurrency sector, until recently, operated similarly, albeit with greater fragmentation.
Funds would assemble custody services from one provider, derivatives from another, and financing from yet another. 'You can replicate a prime broker by combining services, but Coinbase is the only one doing it all natively,' D'Agostino remarks.
As the largest U.S.-based cryptocurrency exchange and a significant provider of infrastructure 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, enabling hedge funds and asset managers to trade, store, and finance digital assets under one umbrella. Prime holds over $350 billion in assets under custody, accounting for approximately 12% of the total crypto market capitalization, and serves as custodian for more than 80% of U.S.
bitcoin and ether ETF assets. The firm has become a crucial bridge between traditional finance and crypto markets, serving as custodian for a substantial share of U.S. bitcoin and ether ETF assets and operating under an expanding regulatory framework, including oversight from New York regulators. Crypto prime brokers provide institutional clients with a bundled suite of services designed to mirror traditional offerings in markets like equities and FX, helping funds manage counterparty risk and access liquidity across fragmented venues.
Prominent players in this space include Coinbase Prime, Galaxy Digital, FalconX, and Anchorage Digital. The final component fell into place in March with the introduction of cross-margining between spot and derivatives positions, allowing market makers and institutional traders to reduce capital requirements by as much as 10% to 20%. 'That was the last piece of the puzzle,' D'Agostino says.
'Now we meet the standard for a prime broker in any asset class, with crypto being no exception.' The institutional platform of Coinbase processes roughly $236 billion in quarterly trading volume and supports over 470 assets across more than 20 blockchains. Beyond trading and custody, Coinbase operates 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 says. 'There are firms that excel in custody, others in derivatives, and others in lending, but no one else is solving all of these problems in one place.' This gap has persisted 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. D'Agostino expects banks and incumbents to partner instead.
'The options are to buy, build, or rent,' he says. 'Banks will opt to rent, as it's more cost-effective and smarter to utilize the best brand rather than building a mediocre version.' In the long term, this calculus could change if crypto grows to 20% or 30% of global markets. 'At that point, you'll see full-scale competition,' D'Agostino predicts. 'However, that's years away.' For now, the more significant threat comes from startups rather than traditional Wall Street players.
'I'm less concerned about JPMorgan than I am about the next Brian Armstrong,' he adds.