Coinbase has urged the Commodity Futures Trading Commission to oversee prediction markets through the existing derivatives framework, rather than create a separate rulebook for event contracts.
The company made its case in an April 30 comment letter responding to the CFTC’s review of prediction markets. The filing comes as federal and state regulators clash over whether event contracts should be treated as financial derivatives or gambling products.
Coinbase says no new mandate is needed
Coinbase argued that event-based contracts already fall within the CFTC’s authority under the Commodity Exchange Act. The company said the products work like other derivatives because they let traders take positions on uncertain outcomes and turn market views into prices.
Its submission asks the CFTC to keep a principles-based approach while tightening oversight where needed. Coinbase wants the agency to clarify how it will review contracts, protect customers, police manipulation and handle products that may raise public interest concerns.
The company also called for tougher action against insider trading. That issue is central to prediction markets because some contracts may involve outcomes where a small group of people has access to information before the public does.
State gambling rules remain the main fight
Coinbase also warned against state-by-state intervention. Its view is that prediction markets are interstate derivatives markets and should be regulated through one federal system, not separate gambling rules in each state.
That argument now sits at the center of the policy fight. The CFTC has sued several states to stop enforcement actions against prediction market operators, arguing that state regulators are interfering with federal authority over event contracts.
State officials have pushed back. Some argue that sports-linked contracts look like wagering and should remain under state gambling law. A group of state attorneys general told the CFTC that sports event contracts fall outside the agency’s jurisdiction and should be treated as sports betting.
Other firms push for clearer federal oversight
Coinbase is one of several firms that responded to the CFTC’s request for comment. Andreessen Horowitz and Paradigm also filed submissions urging the agency to set clearer rules for prediction markets without blocking the category outright.
Andreessen Horowitz said Kalshi’s average weekly trading volume rose from $300 million to $3 billion between September and March, showing why the issue has moved higher on the CFTC’s agenda. Paradigm asked the agency to move away from broad public interest bans and toward case-by-case reviews.
The CFTC opened its review in March and said it would use public comments to decide whether new guidance or rulemaking is needed. Coinbase’s position is that the agency can set guardrails without handing prediction markets to state gambling regulators.
