Coinbase Built an AI Financial Advisor. I Think They’re Solving the Wrong Problem.

Crypto spent years trying to get Wall Street through the door. Now one of its biggest companies may be trying to remove the person who used to stand on the other side of it.

Photo by Marin Tulard on Unsplash

I have a strange question.

Would you meet your financial advisor for lunch at a casino?

Not a restaurant inside a casino because it happens to be convenient.

I mean actually sit down next to the sportsbook, watch people wager on whether something happens in the next fifteen minutes, and discuss your retirement portfolio.

Because that’s roughly the contradiction I see emerging at Coinbase.

And strangely enough, I think it tells us something important about where crypto is right now.

Retail Didn’t Necessarily Leave Crypto. It Stopped Caring. For years, the assumption was simple:

Make crypto easier.

Make custody safer.

Get regulation.

Bring institutions in.

Give people better products.

Then retail will return.

A lot of that has happened.

The infrastructure around Bitcoin today is almost unrecognizable compared with the market I started studying years ago. ETFs exist. Major financial institutions are involved. Stablecoins have become serious financial infrastructure. The regulatory conversation has moved from whether crypto should exist to how America intends to compete in it.

And yet millions of people remain on the sidelines.

I think part of the explanation is embarrassingly simple.

Bitcoin isn’t expensive enough.

That sounds ridiculous until you understand human behavior.

Bitcoin at $75,000 or $80,000 can somehow feel uninteresting to the person who ignored it at $20,000.

But let Bitcoin reach $150,000 or $200,000 and suddenly that same person starts asking:

“Do you think I should finally own some Bitcoin?”

Nothing fundamental necessarily changed overnight.

The price changed.

And price creates attention.

That’s one of the strangest realities of investing: people frequently become more comfortable buying something after it becomes more expensive.

So what does an exchange do while it waits for that excitement to return?

It finds other reasons for people to open the app.

Enter Prediction Markets

Coinbase has been rapidly expanding beyond the traditional idea of a cryptocurrency exchange. Its own materials increasingly describe something closer to an “Everything Exchange,” spanning crypto, equities, derivatives, lending and other financial products.

Prediction markets fit neatly into that strategy.

Today you can find markets on Coinbase asking whether Bitcoin will cross certain prices, how high it will go during a month, whether it will reach $200,000 by 2027, and even where the price might land over much shorter periods.

Prediction-market advocates will correctly point out that these products aren’t legally identical to walking into a sportsbook and placing a football bet. There is an ongoing regulatory fight over exactly how these markets should be treated.

But from the perspective of the person holding the phone?

Let’s not pretend we don’t understand the appeal.

Put money down. Predict an outcome. Get paid if you’re right.

To me, that’s gambling dressed in a Bloomberg terminal.

And then Coinbase did something even more interesting.

It introduced an advisor.

Welcome to Coinbase Advisor

Coinbase Advisor is an AI-powered advisory experience provided through Coinbase Advisors, LLC.

And this isn’t merely a chatbot somebody put an “advisor” label on.

Coinbase says the entity behind the service is registered with the SEC as an investment adviser and with the CFTC as a commodity trading advisor. Coinbase describes Advisor as an AI-powered system grounded in investment frameworks developed by portfolio managers, using market data, information supplied by the customer, current holdings and risk preferences.

It can help construct portfolios.

It can discuss strategies.

It can work across crypto, equities and derivatives.

Coinbase says support for prediction markets is coming as well.

And every transaction still requires the user’s approval. Coinbase specifically describes Advisor as non-discretionary.

Technologically, that’s impressive.

Strategically, it’s even more interesting.

Because I don’t think Coinbase Advisor is merely another product.

I think it points toward the potential disintermediation of the financial advisor.

And we’ve seen this movie before.

First There Was Uber. Then There Was Waymo. Remember what felt revolutionary about Uber?

The app mattered.

The technology mattered.

But there was still a person driving the car.

You got in.

Someone said hello.

You occasionally talked.

Someone understood that the entrance to your hotel wasn’t exactly where the GPS pin said it was.

Technology made the relationship more efficient.

Then came Waymo.

Now the technological progression is toward eliminating the driver altogether.

That might be wonderful transportation technology.

But apply the same progression to financial advice and I think we should ask a more serious question:

Do we actually want to eliminate the person?

Because financial advice isn’t simply portfolio optimization.

A good financial advisor knows things that don’t fit neatly into an allocation model.

Your wife is nervous about retirement.

Your business might be sold in three years.

Your daughter needs help buying her first house.

Your father just died.

You’re getting divorced.

You’re 58 years old, Bitcoin just dropped 35%, and although the questionnaire says your risk tolerance is “aggressive,” you’re staring at the ceiling at 2:00 in the morning wondering whether you just destroyed your retirement.

That’s where relationships matter.

Coinbase itself acknowledges some of the limitations of AI-generated advice. Its risk disclosures warn that AI outputs can be inaccurate, incomplete or outdated and can lack context about someone’s broader financial circumstances, overall position, goals and risk tolerance.

That’s not a criticism I’m inventing.

It’s in the disclosures.

Which brings me back to my imaginary lunch.

Suppose my financial advisor called tomorrow and said:

“Chip, let’s meet at the casino. I want to talk about your portfolio.”

I’d probably ask why we’re meeting at a casino.

Now imagine he responded:

“Don’t worry. Before we discuss your long-term allocation, you can wager on whether Bitcoin will be above a certain price Friday.”

That’s where I struggle with this convergence.

One platform can increasingly provide the market, the trade, the derivative, the prediction contract, the lending product and now the advisor helping you navigate them.

Coinbase Advisor’s terms say its outputs can concern products and services offered by Coinbase and its affiliates as well as broader financial and market subjects.

That’s worth thinking about.

Because there’s an enormous difference between:

“What financial decisions are appropriate for this person’s life?”

and:

“Which combination of products available inside this ecosystem is appropriate for this user?”

Those questions can overlap.

They are not identical.

This Is Where I Took a Different Approach With ALEN

I built ALEN (Alignment Engine) around almost the opposite premise.

I don’t think AI should necessarily replace the financial professional.

I think AI can make the relationship with the right financial professional better.

Someone comes in confused about Bitcoin, tokenization, stablecoins, DeFi, institutional crypto infrastructure or how any of this fits into the financial system.

ALEN can help diagnose the conversation.

It can help someone understand where they are.

It can help determine what they actually need.

And when the situation crosses into territory where the right professional relationship matters, the goal isn’t to keep the person chatting forever.

It’s to route them toward the appropriate next step.

That’s a fundamentally different design philosophy.

Coinbase Advisor makes me think of Waymo.

The technology becomes good enough that eventually we ask:

Why do we need the driver?

ALEN is closer to a limousine service.

The technology can help determine where you’re going.

But the objective isn’t to trap you inside the car.

And it certainly isn’t to keep you driving around the same roundabout because every exit happens to lead to another product owned by the company operating the vehicle.

The objective is to get you to the right destination.

Sometimes that destination is education.

Sometimes it’s better positioning.

Sometimes it’s understanding an opportunity you didn’t know existed.

And sometimes it’s sitting across from a qualified human being who understands that your financial life is considerably more complicated than your risk-tolerance score.

AI Isn’t the Threat. Misalignment Is. That’s the larger point.

I’m not anti-AI.

Obviously.

I built one.

I’m also not anti-Coinbase. In many respects, Coinbase’s expansion is evidence of exactly what I’ve been arguing for years: digital assets aren’t disappearing. They’re being absorbed into the financial system.

But we should pay attention to the incentives surrounding the technology.

The next battle in financial services may not be human advisor versus AI advisor.

It may be something much more nuanced:

AI designed to keep you inside an ecosystem versus AI designed to help you navigate outside of one.

Those are very different things.

And this is happening while retail investors remain strangely disengaged from crypto.

That’s what fascinates me most.

Right now, Bitcoin’s price has left plenty of people uninterested.

They’ve seen the headlines.

They’ve heard about the ETFs.

They know institutions own it.

They’ve watched Washington become considerably more engaged with digital assets.

And they still haven’t acted.

But I don’t believe that necessarily means retail has rejected Bitcoin.

I think millions of people are waiting for price to give them permission to become interested again.

If Bitcoin eventually trades at $150,000, $200,000 or beyond, watch how quickly the conversation changes.

People who wouldn’t buy Bitcoin lower will suddenly become afraid of missing it higher.

And when they arrive, Coinbase won’t look like the Coinbase they remember.

It may have crypto.

Stocks.

Derivatives.

Lending.

Prediction markets.

And an AI financial advisor waiting to greet them at the door.

That’s an extraordinary business evolution.

But investors should understand the difference between having access to more financial products and having better financial direction.

Those aren’t the same thing.

The future of financial advice probably does involve AI.

The question is whether AI becomes the vehicle that keeps driving you around the platform —

or the tool that recognizes where you’re actually trying to go.

I’d rather have the limo driver.

Chip Mahoney writes about Bitcoin, institutional crypto infrastructure, tokenization and the movement of capital beneath the headlines. He created ALEN to help investors and financial professionals better navigate the gap between traditional finance and the emerging digital-asset economy.