Fractional reserve banking is a prisoner's dilemma, we all marginally benefit from the status quo of credit/debit/interest, but in a crisis, the first people to pull out win, and everyone else loses.
It stores your shares for you, but it’s not loaning them out. The only way you get money out of Coinbase is if someone buys your shares.
1 BTC at Coinbase is only worth whatever Fiat currency Coinbase is willing to buy it from you for. If that's $1 for all your Bitcoins, tough luck.
They're under no obligation to guarantee a sale price for BTC.
Then how do they pay you when you come to withdraw your cash?