Coinbase has reached a milestone that is immediately 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, the head of strategy at Coinbase Institutional, explained that the definition of a prime broker is still based on a familiar checklist from Wall Street, which includes trading, custody, financing, derivatives, and cross-margining, with an additional layer of staking in the crypto space.
'If you can perform all of these functions at scale, you're considered a prime,' he stated. In the equities and fixed income markets, only a handful of firms, including Goldman Sachs, Morgan Stanley, and Bank of America, truly qualify as full-service primes, D'Agostino noted. Smaller brokers may support funds, but they don't offer the full range of services. 'A $100 million hedge fund isn't getting everything from a top-tier firm; they're piecing it together,' he said.
'The large primes do everything.' The crypto space, until recently, operated in a similar manner, albeit with more fragmentation. Funds would assemble custody from one provider, derivatives from another, and financing from yet another.
'You can replicate a prime broker by patching together services,' D'Agostino said. 'But Coinbase is the only one doing all of it natively.' As the largest U.S.-based cryptocurrency exchange and a major provider of infrastructure for institutional investors, Coinbase offers trading, custody, and financing services through its Coinbase Institutional unit.
The flagship platform, Coinbase Prime, bundles these functions into a single system, allowing hedge funds and asset managers to trade, store, and finance digital assets under one roof. Prime holds over $350 billion in assets under custody, 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 key bridge between traditional finance and crypto markets, serving as custodian for a significant share of U.S. bitcoin and ether ETF assets and operating under a growing 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.
They help 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 piece of the puzzle fell into place in March with the rollout 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 pillar,' D'Agostino said.
'Now we're a prime by any standard, substituting crypto for any asset class.' Coinbase's institutional platform processes roughly $236 billion in quarterly trading volume and supports more than 470 assets across 20-plus 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 doing well in custody, others in derivatives, others in lending. No one is solving all of those problems in one place.' This gap has persisted in part due to crypto's relatively small size. At roughly 3% to 5% of global equities and fixed income markets, it remains too small for major banks to fully commit.
D'Agostino instead 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, that 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.