Introduction
Coinbase is reportedly preparing to launch prediction markets and tokenized equities on December 17, according to a Bloomberg report. The crypto exchange’s move capitalizes on a sector experiencing explosive growth, with $28 billion in year-to-date trading volume, but it also steps directly into a fierce regulatory battle. As state bans proliferate and federal lawmakers target election betting, Coinbase and other major firms are forming a coalition to advocate for federal oversight, setting the stage for a high-stakes clash over the future of these markets.
Key Points
- Prediction markets have processed $28 billion in trading volume year-to-date through October, with studies showing they outperform traditional election polling by approximately 30%.
- Washington State's Gambling Commission recently declared prediction markets an "unauthorized activity," while federal lawmakers continue pushing the Ban Gambling on Elections Act to prohibit political betting.
- Major crypto and fintech firms including Coinbase, Kalshi, Robinhood, and Crypto.com have formed the Coalition for Prediction Markets to advocate for federal regulation and address conflicting state-level oversight.
A High-Growth Market Attracts Major Players
The reported launch by Coinbase represents a significant bet on the burgeoning prediction market industry. Data indicates a market in rapid ascent, with trading volume hitting $28 billion year-to-date through October. Studies suggest these markets, where users trade on the outcome of future events, can outperform traditional election polling by roughly 30%. The broader U.S. predictive analytics industry, valued at about $14 billion, is projected to grow to $32.85 billion by 2030. Coinbase is not alone in recognizing this potential. Competitor Gemini secured approval this week to introduce its own prediction markets, while Crypto.com has partnered with Trump Media & Technology Group Corp. to support similar initiatives. Screenshots shared on social media platform X in recent weeks appeared to show early versions of Coinbase’s offering, seemingly powered by prediction market platform Kalshi.
This surge in institutional interest underscores a strategic pivot for crypto exchanges like Coinbase and Gemini, which are seeking new revenue streams and product diversification beyond traditional spot trading. The planned launch of tokenized equities alongside prediction markets suggests an ambition to create a comprehensive platform for trading both real-world and event-based assets. Coinbase representatives have pointed to a livestreamed event scheduled for December 17 when previously reached about product leaks, though the company did not immediately comment on the latest Bloomberg report.
Mounting Regulatory Pressure and Legal Challenges
Despite the market’s growth, the regulatory environment is becoming increasingly hostile. The path for prediction markets in the U.S. has been fraught with legal challenges, as evidenced by the experience of leading platform Polymarket. In 2022, the Commodity Futures Trading Commission (CFTC) forced Polymarket out of the market under a settlement for failing to register as a derivatives exchange. It was only approved to return this November following its acquisition of QCEX, a CFTC-regulated exchange and clearinghouse.
State regulators are now taking a more aggressive stance. Earlier this week, the Washington State Gambling Commission declared prediction markets an “unauthorized activity,” issuing a ban and stating it is monitoring ongoing federal and state court battles that will determine the markets’ legal status. At the federal level, lawmakers are targeting political betting, a popular vertical on these platforms. Reps. 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. Senator Jeff Merkley has warned that betting on elections opens the door to corruption and undermines democratic processes, a sentiment echoed internationally in countries like Taiwan that already bar election wagering.
Further complicating the landscape are accusations of market manipulation. In November, researchers estimated that as many as a quarter of the trades on Polymarket could be artificial wash trading, designed to inflate volume. This scrutiny over integrity and legality creates a significant headwind for new entrants like Coinbase, which must navigate a patchwork of conflicting regulations.
Industry Unites to Advocate for Federal Clarity
In direct response to this regulatory uncertainty, a powerful coalition of major fintech and crypto firms announced its formation on Thursday. The Coalition for Prediction Markets (CPM) includes Kalshi, Crypto.com, Coinbase, Robinhood, and Underdog. The group’s stated aim is to advocate for federally supervised, transparent access to prediction markets as adoption accelerates and state casino regulators assert oversight traditionally handled at the federal level.
“From day one, we wanted to be regulated. 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,” said Sara Slane, executive board member of the Coalition and head of corporate development at Kalshi. “Americans deserve clarity, not 50 conflicting interpretations,” she added, highlighting the core issue of inconsistent state-level action. The coalition’s formation signals a proactive effort by the industry to shape its own regulatory future, arguing that federal oversight under bodies like the CFTC is preferable to a fragmented and potentially prohibitive state-by-state approach.
As Coinbase prepares its December 17 launch, the stage is set for a pivotal moment. The exchange is entering a high-potential market characterized by strong demand and technological promise, but one that is simultaneously engulfed in a fierce debate over its fundamental legality and societal impact. The success of Coinbase’s foray, and indeed the broader industry’s future in the United States, may hinge less on consumer adoption and more on the outcome of the regulatory and advocacy battle now being waged by the newly formed Coalition for Prediction Markets.
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