According to PYMNTS.com, Coinbase announced on Wednesday, December 17, that it will begin allowing U.S. users to trade on prediction markets through a partnership with Kalshi. At launch, all market flow will come from Kalshi, letting users bet on outcomes for real-world events like elections, sports, and economic indicators. CEO Brian Armstrong told CNBC he believes 99% of people will use it to figure out what’s going to happen, not as a trading asset. This follows a CNBC report last week about the partnership and comes as Robinhood reports its prediction market business is its fastest-growing ever, with 2.3 billion event contracts traded in Q3 and 2.5 billion in October alone. Coinbase also announced expanded DEX trading for Solana tokens and new futures offerings at its “Coinbase System Update” event.
Coinbase Bets On Betting
Here’s the thing: this isn’t just a new tab on the Coinbase app. It’s a strategic move into a space that’s heating up fast, and Brian Armstrong’s comments are telling. He’s basically framing prediction markets as a form of information discovery or even entertainment, a “competitor to traditional media.” That’s a clever narrative, maybe even a necessary one. It softens the edge of what is, let’s be real, legalized betting on non-sports events. By integrating these positions right alongside crypto and stocks, Coinbase is normalizing it as just another financial instrument. And their plan to support other platforms beyond Kalshi soon shows they want to be the aggregator, the main hub for this activity. It’s a land grab.
Robinhood’s Head Start
But Coinbase isn’t first. Not even close. Robinhood’s Vlad Tenev has already called this his company’s fastest-growing business, and those numbers are staggering. 2.5 billion contracts in a single month? That’s a level of engagement most apps dream of. And Robinhood just expanded into NFL game trading this week. So Coinbase is playing catch-up in a market that a key competitor already owns. The question is, does Coinbase’s brand and its core user base of crypto-natives give it an advantage? Maybe. Crypto traders are already comfortable with volatility and speculative assets. This feels like a natural, if risky, extension for them.
The Regulatory Tightrope
Now, let’s talk about the big elephant in the room: regulation. The PYMNTS source itself points out the potential here for “regulatory arbitrage around state gaming laws.” That’s a polite way of saying this could be a legal minefield. Calling it a “new asset class” with “derivatives-grade infrastructure” is the industry’s argument for legitimacy. But at its heart, you’re still wagering on an event outcome. The SEC and CFTC have been wary of this for years. Coinbase and Robinhood are betting—pun intended—that by building it on a formal trading platform, they can navigate these waters. I think we’re about to see a major regulatory clash. It’s not a matter of *if*, but *when*.
A Broader Shift
So what does this all mean? We’re watching a fundamental expansion of what a “trading platform” is supposed to be. It’s no longer just stocks and crypto. It’s the price of wheat, the volatility of Bitcoin, and now, who will win the next election or the Super Bowl. It’s the complete financialization of… everything. For users, it’s a new toy and a potential hedge. For the companies, it’s a massive engagement play and a new revenue stream. But it also massively blurs lines. Is this finance, gambling, or information? Armstrong says it’s mostly the latter. I’m skeptical. When you can manage your “NFL game” position next to your retirement savings, the lines aren’t just blurred—they’re erased. The future of finance might be on Coinbase, as their blog post claims, but it’s looking a lot more like a casino than anyone wants to admit.
