Coinbase (COIN) has quietly crossed a threshold that Wall Street would immediately recognize: it has become, by its own definition, the only full-service prime brokerage in crypto.
John D’Agostino, chief strategy officer at Coinbase Institutional, said the definition of a prime broker still follows a checklist familiar to Wall Street: trading, custody, funding, derivatives and cross-margining. In cryptography, he added, there is an additional layer, staking. “If you can do all of this at scale, you’re great,” he said.
In the equity and fixed-income space, only a handful of firms, Goldman Sachs (GS), Morgan Stanley (MS) and Bank of America (BAC), truly qualify as full-service primes, D’Agostino said. Smaller brokers may support funds, but they do not offer the full range. “A $100 million hedge fund doesn’t get everything that comes from the top level. They’re piecing it all together,” he said. “Big prime numbers are everything.”
Until recently, crypto worked the same way, but in a more fragmented way. Pooled funds, custody from one provider, derivatives from another, financing elsewhere. “You can synthetically replicate a prime by combining services together,” D’Agostino said. “But Coinbase is the only one that does all of this natively.”
Coinbase is the largest U.S.-based cryptocurrency exchange and a major infrastructure provider for institutional investors, offering trading, custody and financing services through its Coinbase Institutional unit.
Its flagship platform, Coinbase Prime, brings together 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 cap, and serves as the custodian for over 80% of U.S. Bitcoin and Ether ETF assets.
The company has become a key bridge between traditional financial markets and crypto markets, serving as a custodian for a significant portion of U.S. bitcoin. and ether (ETH) and exchange-traded fund (ETF) assets and operating under a growing regulatory framework, including oversight from New York regulators
Prime crypto brokers provide institutional clients with a bundled suite of services designed to mirror traditional offerings in markets like stocks and foreign exchange. They help funds manage counterparty risk and access liquidity across fragmented locations. Major players include Coinbase Prime, Galaxy Digital (GLXY), FalconX, and Anchorage Digital.
Cross margins
The final element was put in place in March with the deployment of cross-margining between spot and derivatives positions, allowing market makers and institutional traders to reduce capital requirements by up to 10-20%. “It was the last pillar,” D’Agostino said. “Now we are a leader in every way, substituting crypto for any asset class.”
Coinbase’s institutional platform processes approximately $236 billion in quarterly trading volume and supports more than 470 assets across more than 20 blockchains.
Beyond trading and custody, Coinbase manages a billion-dollar loan portfolio and what D’Agostino describes as the industry’s largest listed derivatives footprint through its Deribit integration. Its staking activity spans 10-20 institutional-scale tokens, including dedicated products through Coinbase Asset Management.
“Those are the essentials. Some companies do well in custody, some do well in derivatives, some do well in lending,” he said. “No one solves all these problems in one place.”
This gap persists in part because of the relative size of crypto. Representing around 3-5% of global equity and fixed income markets, it remains too small for the big banks to fully commit.
Instead, D’Agostino expects banks and incumbents to team up. “Buy, build or rent,” he said. “Banks will rent. It’s cheaper and smarter to rent the best brand rather than create a mediocre version.”
Longer term, this calculation could change if crypto reaches 20 or 30% of global markets. “Then you’ll see large-scale competition,” D’Agostino said. “But that will be years away.”
For now, the biggest threat is not Wall Street, but startups. “I’m less concerned about JPMorgan than I am about the next Brian Armstrong,” he added.
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