Coinbase to Launch Prediction Markets, Tokenized Stocks in December
Coinbase is preparing to launch a prediction market and tokenized equities on December 17, according to a Bloomberg report Thursday. The exchange has discussed entering these markets before, but it has not formally announced the products. Screenshots shared on X in recent weeks appeared to show early versions of the features, with prediction market Kalshi appearing to power Coinbase’s own predictions offering. Coinbase representatives pointed to a livestreamed event scheduled for December 17 when previously reached about the leaks. Coinbase did not immediately respond to a request for comment following the Thursday report.
The move represents a significant development in the burgeoning prediction markets sector. These markets, where participants bet on the outcomes of future events, are experiencing a surge in adoption, driven by their potential to provide more accurate forecasts compared to traditional polling methods. Trading volume has already reached a substantial $28 billion year-to-date through October, based on studies suggesting these markets outperform traditional election polling by approximately 30%. The overall U.S. predictive analytics industry is currently valued at roughly $14 billion and is projected to grow to $32.85 billion by 2030, highlighting the increasing investment and interest in this technology. The shift towards prediction markets signals a potential transformation in how people analyze and anticipate future events, moving beyond traditional, often unreliable, polling data.
Coinbase’s entry is occurring within a competitive landscape, with other players also ramping up their offerings. Geminisecured approval this week to introduce its own prediction markets, while Crypto.com has partnered with Trump Media & Technology Group Corp. to support similar initiatives. However, the sector faces significant regulatory challenges. Notably, Polymarket was forced out of the market in 2022 under a Commodity Futures Trading Commission (CFTC) settlement for failing to register as a derivatives exchange. The CFTC approved it to return this November following the acquisition of QCEX, a CFTC-regulated exchange and clearinghouse, illustrating the ongoing legal battles surrounding the legitimacy and oversight of these markets. Currently, state regulators are enacting bans on prediction markets, including a recent declaration by the Washington State Gambling Commission that these markets constitute an “unauthorized activity.” These regulators are asserting oversight that was traditionally handled at the federal level, creating a fragmented and uncertain environment for companies operating in this space.
At the federal level, lawmakers continue to target political betting. Representatives Jamie Raskin and Andrea Salinas introduced the Ban Gambling on Elections Act last December, amid an estimated $930 million in wagers on the 2024 election across major platforms. This legislation reflects growing concerns about the potential for corruption and the undermining of democratic processes associated with political betting. Senator Jeff Merkley has also voiced strong warnings about the risks presented by elections betting, highlighting the potential for abuse and manipulation. These concerns underscore the high-stakes nature of these markets and the need for robust regulatory frameworks.
To address these challenges and advocate for a unified approach, major fintech and crypto firms—Kalshi, Crypto.com, Coinbase, Robinhood, and Underdog—announced the formation of the Coalition for Prediction Markets (CPM) on Thursday. This group’s primary objective is to champion federally supervised, transparent access to prediction markets as adoption accelerates and state casino regulators assert oversight traditionally handled at the federal level. The CPM’s creation signals a concerted effort to shape the future of this rapidly evolving sector.
Sara Slane, executive board member of the Coalition and head of corporate development at Kalshi, emphasized the company’s longstanding commitment to regulation. Kalshi has spent years working with the CFTC, recognizing that prediction markets must operate with strong federal safeguards to prevent insider trading, protect consumers, and ensure these markets remain transparent and corruption-free. “From day one, we wanted to be regulated,” Slane stated. “We spent years working with the CFTC because prediction markets must operate with strong federal safeguards that prevent insider trading, protect consumers, and ensure these markets remain transparent and corruption-free.” This perspective reflects a fundamental belief that only through proper regulation can prediction markets achieve their full potential and operate responsibly. The launch of Kalshi as the first federally regulated prediction market highlights a pivotal moment in the industry’s development, aiming to provide clarity and stability in a previously uncertain environment.
