Coinbase Poised to Launch Prediction Market Platform

Crypto exchange Coinbase is reportedly gearing up to enter the prediction market competition that has seen many other firms enter the fray as well. The date of the launch has not been released, but the company will employ Kalshi’s technology to power this new exchange.

Coinbase Predicts New Market Launch

The rumors regarding crypto exchange Coinbase’s new endeavor to enter the prediction market have swirled since the middle of November. However, recent reports have confirmed that the company will be launching its own in-house exchange in partnership with industry-leading Kalshi.

What is unclear is when the launch will take place, but sources believe it will occur on December 17th during a “Coinbase System Update.” And lthough Kalshi works with other platforms, its technology will be used exclusively by Coinbase, and its CEO, Brian Armstrong, has shared his desire to make Coinbase an “everything exchange.”

We have seen other exchanges like Gemini, Kraken, and Robinhood enter the prediction market fray, while online sportsbooks like Fanatics have already launched, and powerhouses DraftKings and FanDuel intend to do the same.

The Coinbase expansion also helps Kalshi expand its reach as the prediction market flourishes due to the high exposure of its sports event trading contracts. This area has spurred legal action from state gaming regulators who insist that any company offering anything resembling sports betting be licensed and subject to tax.

However, Kalshi and other prediction market platforms like Polymarket and Crypto.com have challenged that demand in court, countering that they are governed by the rules stipulated by the Commodity Futures Trading Commission (CFTC), as it is a federal entity and therefore its licensees are not subject to state laws.

Selig Will Let the Courts Decide

Although Kalshi has notched several legal victories regarding its authority to offer sports event contracts, its governing agency, the CFTC, has taken a laissez-faire approach to prediction markets self-certifying their sports event contracts.

The federal agency has neither advanced nor hindered its licensees from offering sports event contracts throughout the nation.

And that is not expected to change once Michael Selig, the nominee to replace Acting CFTC Chairperson Caroline Pham, is installed. Minnesota Senator Tina Smith pointedly asked Selig what his opinion was of derivative financial exchanges offering sports event trading and if it would continue unabated under his watch.

Senator Adam Schiff of California followed up with his own query, but Selig did not take the bait and stated, “Many lengthy legal opinions have been written on one word in a statute, and I would really want the benefit of understanding what the judges think about the issue. This could be one that works its way all the way up to the top, and so I’ll look to the courts to the issue.”

Should Selig become the new CFTC chairman, it is likely nothing will change in its approach to sports events contracts being traded in jurisdictions that have legalized mobile sports betting, and that the Supreme Court will be the ultimate arbiter if it gets that far.