Coinbase (COIN) has quietly crossed a threshold that Wall Street would recognize immediately: it has become, by its own definition, the only full-service prime brokerage in crypto.
John D’Agostino, head of strategy at Coinbase Institutional, said the definition of a prime broker still follows a familiar Wall Street checklist: trading, custody, financing, derivatives and cross-margining. In crypto, he added, there’s an extra layer, staking. “If you can do all of those at scale, you’re a prime,” he said.
In equities and fixed income, 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 can support funds, but they don’t offer the full stack. “A $100 million hedge fund isn’t getting everything from the top tier. They’re piecing it together,” he said. “The big primes do everything.”
Crypto, until recently, worked the same way, just more fragmented. Funds stitched together custody from one provider, derivatives from another, financing elsewhere. “You can synthetically replicate a prime by patching services together,” D’Agostino said. “But Coinbase is the only one doing all of it natively.”
Coinbase is the largest U.S.-based cryptocurrency exchange and a major provider of infrastructure for institutional investors, offering trading, custody and financing services through its Coinbase Institutional unit.
Its 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, about 12% of the total crypto market cap, 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 (ETH) exchange-traded fund (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 include Coinbase Prime, Galaxy Digital (GLXY), FalconX and Anchorage Digital.
Cross-margining
The final piece 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, substitute 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 runs 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. There are firms doing well in custody, others in derivatives, others in lending,” he said. “No one is solving all of those problems in one place.”
That gap has persisted in part because of crypto’s relative 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 so-so version.”
Longer 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.
Read more: Coinbase, Bybit said to be working together on tokenization, custody and distribution of U.S. stocks