Coinbase has achieved a milestone that echoes a familiar standard on Wall Street: it has become the only full-service prime brokerage in the crypto space. John D'Agostino, the head of strategy at Coinbase Institutional, notes that the definition of a prime broker encompasses a specific set of services: trading, custody, financing, derivatives, and cross-margining, with the additional layer of staking in crypto.
'If you can offer all these services at scale, you're considered a prime,' he explains. In traditional markets like equities and fixed income, only a select few, such as Goldman Sachs, Morgan Stanley, and Bank of America, qualify as full-service prime brokers. 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 broker, so they piece it together,' D'Agostino says.
'The large prime brokers offer the full range of services.' The crypto landscape, until recently, was similarly fragmented, with funds assembling services from various providers. 'You can replicate a prime broker by piecing together different services, but Coinbase is the only one offering all these services natively,' D'Agostino adds. 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.
With over $350 billion in assets under custody, representing about 12% of the total crypto market cap, and serving as custodian for more than 80% of U.S. bitcoin and ether ETF assets, Coinbase Prime has become a pivotal bridge between traditional finance and crypto markets.
The firm operates under a growing regulatory framework, including oversight from New York regulators. Crypto prime brokers provide institutional clients with a bundled suite of services mirroring traditional offerings in markets like equities and FX, helping funds manage counterparty risk and access liquidity across fragmented venues. Key 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 piece of the puzzle, allowing market makers and institutional traders to reduce capital requirements by 10% to 20%.
'That was the last component,' D'Agostino says. 'Now we meet the standard of a prime broker by any measure, 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 boasts a $1 billion lending book and 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,' D'Agostino notes.
'There are firms that excel in custody, others in derivatives, and others in lending, but no one else offers all these services in one place.' This gap persists partly due to crypto's relatively small size, accounting for only 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 incumbents will instead opt to partner.
'The strategy is to buy, build, or rent,' he says. 'Banks will choose to rent because it's cheaper and smarter to leverage the best brand rather than build a mediocre version.' In the long term, this dynamic could shift if crypto grows to represent 20% or 30% of global markets. 'Then you'll see full-scale competition,' D'Agostino predicts. 'But 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.