Coinbase Prepares to Launch Internal Prediction Market with Kalshi Partnership

Coinbase, the leading cryptocurrency exchange in the United States, is gearing up to launch its own prediction market. This venture will be in partnership with Kalshi, a major federally regulated financial exchange.

Key Takeaways:

Coinbase is set to launch a new prediction market in collaboration with Kalshi.
Anticipation is building ahead of the "Coinbase System Update" event on December 17, where more details are expected.
CEO Brian Armstrong aims to position Coinbase as an "everything exchange" for trading diverse assets.
Increased competition in the market has prompted Coinbase to expand its offerings and pursue various acquisitions.
The current market sentiment is cautious, with major cryptocurrencies experiencing a notable decline in value.

Coinbase

Summary of Developments

According to a CNBC report, the excitement surrounding Coinbase's prediction market has been building for nearly a month. Recently, Jane Manchun Wong, a researcher from Silicon Valley, shared a screenshot on social media platform X (formerly known as Twitter) that appears to show the dashboard of Coinbase's prediction markets.

The Information first reported on November 19 that Coinbase was planning to unveil these prediction markets, powered by Kalshi, during a "Coinbase System Update" event scheduled for December 17. Formal announcements regarding this new feature are anticipated soon, possibly within the next week.

Bloomberg has also supported this report, suggesting that Coinbase may announce a tokenized stock offering during the same event, aligning with the vision reported earlier by Tether.

While Coinbase has not publicly confirmed these developments to CNBC, the company has invited stakeholders to tune in for more details at the upcoming event. However, no specific timeline has been disclosed for when users can access the prediction markets.

Embracing an "Everything Exchange" Model

The launch of a prediction market is part of Coinbase's larger plan to establish itself as an "everything exchange," providing a unified platform for trading various asset types, which include cryptocurrencies, tokenized stocks, and event contracts.

In May, CEO Brian Armstrong articulated this vision, revealing that the aim is to become a leading financial services application within a decade. This strategic move comes amid growing competition from rivals like Robinhood, Gemini, and Kraken, all of which have introduced tokenized equity offerings for users outside the U.S. and are exploring prediction markets to varying extents.

Additionally, Coinbase has been diversifying its financial instruments this year, notably through several significant acquisitions, which include the purchase of the crypto derivatives exchange Deribit and the on-chain advertising firm Spindl, along with seven other major acquisitions.

This push towards expansion occurs against a backdrop of shifting investor sentiment in the digital asset sector, with major cryptocurrencies, including Bitcoin, recently experiencing a decline of over 30% since October—prompting concerns of a potential bear market.

Coinbase
The daily chart indicates COIN’s valuation trending downwards. Source: COIN on TradingView.com

Over the past few months, the price of Coinbase's stock (traded under the ticker COIN) has dropped significantly, losing over 39%, with its current valuation at $267 per share.