Coinbase has achieved a milestone that is instantly recognizable on Wall Street: it has become the only full-service prime brokerage in the crypto sector, according to its own definition. John D'Agostino, the head of strategy at Coinbase Institutional, outlined the characteristics of a prime broker, which include trading, custody, financing, derivatives, and cross-margining, with the added element of staking in the crypto space. 'If you can deliver all of those services at scale, you qualify as a prime,' he stated. In traditional markets such as 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.
Smaller brokers may support funds but lack the comprehensive range of services. 'A $100 million hedge fund isn't receiving the full suite of services from a top-tier firm; instead, they're piecing it together,' D'Agostino explained.
'The major primes offer everything.' The crypto 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 artificially replicate a prime broker by combining services, but Coinbase is the only one providing all of these services natively,' D'Agostino said. 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 roof. 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 company has become a crucial link between traditional finance and crypto markets, serving as custodian for a substantial portion 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 such as equities and FX.
They assist funds in managing counterparty risk and accessing liquidity across fragmented venues. Notable 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 said. 'Now we meet the definition of a prime broker by any standard, with crypto substituting for any asset class.' The institutional platform of Coinbase processes approximately $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 said. 'There are firms performing well in custody, others in derivatives, and others in lending.
No one else is solving all of these problems in a single location.' This gap has persisted partly due to the relative 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 anticipates that banks and established players will instead opt to partner. 'Buy, build, or rent,' he said.
'Banks will choose to rent, as it is more cost-effective and smarter to rent the best brand rather than build an average version.' In the long term, this calculation could change if crypto grows to 20% or 30% of global markets. 'At that point, you will see full-scale competition,' D'Agostino said. 'However, that is years away.' For now, the greater threat is not Wall Street but rather startups. 'I am less concerned about JPMorgan than I am about the next Brian Armstrong,' he added.