Coinbase has achieved a milestone in the crypto industry by becoming the only full-service prime brokerage, offering a comprehensive suite of services including trading, custody, financing, derivatives, and cross-margining. According to John D'Agostino, head of strategy at Coinbase Institutional, this is a significant achievement, as it allows the company to provide a one-stop solution for institutional investors. In traditional finance, only a handful of firms, such as Goldman Sachs and Morgan Stanley, qualify as full-service prime brokers, and the same is now true in the crypto space, with Coinbase being the sole player.
The company's institutional platform, Coinbase Prime, has over $350 billion in assets under custody and serves as a custodian for more than 80% of US bitcoin and ether ETF assets. With the recent addition of cross-margining, Coinbase has completed its full-service prime brokerage offering, allowing market makers and institutional traders to reduce capital requirements. The company's lending book and derivatives footprint are also significant, with a $1 billion lending book and the industry's largest listed derivatives footprint through its Deribit integration. D'Agostino believes that the gap in the market has persisted due to crypto's relatively small size, but expects banks and incumbents to partner with companies like Coinbase rather than building their own solutions.
The bigger threat to Coinbase, he believes, comes from startups rather than traditional financial institutions.