The New Crypto-Traditional Finance Convergence: How Coinbase and Robinhood's Expansion Threatens Legacy Brokers

The financial landscape in 2026 is undergoing a seismic shift as crypto-native platforms like Coinbase and Robinhood aggressively expand into traditional asset classes, forcing legacy brokers to defend their turf. This convergence of crypto and traditional finance is not just a trend-it's a structural redefinition of how capital flows, user behavior, and institutional trust are being reshaped. With both Coinbase and Robinhood leveraging AI, tokenization, and prediction markets, the stakes are high for incumbents like Charles Schwab, Fidelity, and Webull.

Coinbase's "Everything Exchange" Gambit

Coinbase is no longer just a crypto exchange. By 2026, it has positioned itself as a hybrid platform offering tokenized equities, prediction markets, and AI-driven wealth management tools. The company's partnership with Kalshi and its rollout of 24/7 tokenized stock trading signal a direct challenge to legacy brokers. According to a report by Reuters, Coinbase's Q3 2025 revenue surged 55% year-on-year to $1.87 billion, driven by institutional-grade infrastructure and a 122% sequential increase in institutional trading revenue. This expansion into traditional assets is part of a broader strategy to become a "one-stop financial app," collapsing the distinction between crypto and traditional markets.

Coinbase's foray into prediction markets is particularly disruptive. By enabling users to trade contracts tied to real-world events (e.g., elections, economic indicators), it's tapping into a $20 billion market expected to grow by 2030. This move mirrors Robinhood's earlier success in democratizing trading, but with a crypto-native edge.

Robinhood's Retail-Centric Blitz

Robinhood's Q3 2025 results underscore its dominance in the retail segment. Total net revenue hit $1.27 billion, doubling year-on-year, with crypto trading revenue surging 300% to $268 million. The platform's expansion into futures, prediction markets, and tokenized equities for European users has diversified its revenue streams, reducing reliance on traditional stock trading. According to Mizuho analysts, Robinhood's prediction markets are its "fastest-growing revenue line," with users more likely to fund these activities with fresh cash rather than liquidating existing assets.

Robinhood's success lies in its ability to leverage a massive retail user base (26.8 million funded accounts) and low-cost, high-frequency trading models. Its recent acquisition of Backed Finance and migration of tokenized assets to its own Layer 2 infrastructure further solidify its position as a hybrid platform.

Legacy Brokers: Fighting Fire with Fire

Legacy brokers are not standing idle. Charles Schwab and Fidelity have enhanced their digital platforms with AI-driven personalization and expanded crypto offerings. Interactive Brokers, for instance, has prioritized growth in emerging markets, while Webull and MooMoo have slashed fees to compete with Robinhood's commission-free model.

However, these responses are reactive rather than transformative. For example, Schwab's tokenized asset initiatives lag behind Coinbase's and Robinhood's integrated ecosystems. Meanwhile, Fidelity's foray into crypto custody services is more institutional-focused, leaving retail gaps for disruptors to exploit.

Market Share Shifts and the Road Ahead

The data paints a clear picture of disruption. Robinhood's prediction markets grew 129% in Q3 2025, while Coinbase's retail trading volume hit $59 billion. By 2026, these platforms are projected to capture 15-20% of the traditional brokerage market, a figure that could rise as tokenized equities and AI-driven tools mature.

Legacy brokers face a dual challenge: regulatory scrutiny and user migration. For instance, the Basel Committee's revised prudential rules have made it harder for traditional institutions to innovate quickly. At the same time, platforms like Public.com are launching "agentic brokerages" that automate rule-based trading, further eroding legacy players' competitive edge.

Conclusion: The Future is Hybrid

The crypto-traditional convergence is irreversible. Coinbase and Robinhood are redefining financial services by blending speed, accessibility, and innovation. Legacy brokers must either accelerate their own tech investments or risk obsolescence. As the market evolves, investors should watch for three key trends:
1. Tokenized equities becoming mainstream, enabling 24/7 trading and fractional ownership.
2. AI-driven personalization reshaping portfolio management according to market analysis.
3. Prediction markets expanding into global macro events, with Kalshi and Polymarket leading the charge.

The winners in 2026 will be those who embrace this hybrid model-not just survive it.