Coinbase (COIN) has quietly crossed a threshold that Wall Street would recognize immediately: it has, by its own definition, become 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, funding, derivatives and cross-margining. In crypto, he added, there is an extra layer, staking. “If you can do all of these at scale, you’re prime,” he said.
In equities and fixed income, only a handful of companies, Goldman Sachs ( GS ), Morgan Stanley ( MS ) and Bank of America ( BAC ), really qualify as full-service primes, D’Agostino said. Smaller brokers may support funds, but they don’t offer the full stack. “A $100 million hedge fund doesn’t get everything from the top level. They pool it together,” he said. “The big premiers do everything.”
Until recently, Crypto worked the same way, just more fragmented. Funds pooled 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 that does it all naturally.”
Coinbase is the largest US-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 these features together in a single system, allowing hedge funds and asset managers to trade, store and fund digital assets under one roof. Prime has over $350 billion in assets under custody, roughly 12% of the total crypto market capitalization, and serves as the custodian for more than 80% of US bitcoin and ether ETF assets.
The firm has become a key bridge between traditional financial and crypto markets and acts as a depository for a significant share of US bitcoin and ether (ETH) exchange-traded fund (ETF) assets and operate under an expanding regulatory framework, including oversight by New York regulators
Crypto prime brokers provide institutional clients with a suite of services designed to mirror traditional offerings in markets such as stocks and currencies. 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 are a prime by any standard, replacing crypto for any asset class.”
Coinbase’s institutional platform processes about $236 billion in quarterly trading volume and supports more than 470 assets across 20-plus blockchains.
In addition to trading and custody, Coinbase operates a $1 billion loan book and what D’Agostino describes as the industry’s largest listed derivatives through its Deribit integration. Its staking business spans 10 to 20 institutional-scale tokens, including dedicated products through Coinbase Asset Management.
“Those are the core components. There are companies that do well in custody, others in derivatives, others in lending,” he said. “No one solves all these problems in one place.”
This gap has persisted in part because of crypto’s relative size. At around 3% to 5% of global equity and fixed income markets, it is still too small for major banks to fully commit.
D’Agostino instead expects banks and established companies to cooperate. “Buy, build or rent,” he said. “The banks want to rent. It’s cheaper and smarter to rent the best brand than to build a half-baked version.”
In the long term, this calculation may 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 biggest threat isn’t Wall Street, it’s startups. “I’m less worried about JPMorgan than I am about the next Brian Armstrong,” he added.
Read more: Coinbase, Bybit are said to be working together on tokenization, custody and distribution of US stocks
