Prediction markets are emerging as a new battleground for tech and financial firms, with Coinbase Global, Inc. preparing to collaborate with Kalshi to launch a prediction market service. This move will allow its cryptocurrency clients to place bets on events such as elections and sports. Analysts note that prediction markets naturally align with crypto trading platforms, as they often accept cryptocurrencies as payment. For instance, Kalshi accepts Circle’s USDC stablecoin and uses Coinbase for custody.
The largest U.S. cryptocurrency exchange, Coinbase, is gearing up to introduce a prediction market service, enabling its crypto clients to wager on various events. The initiative will be powered by prediction market firm Kalshi, marking Coinbase’s entry into this fast-growing yet increasingly competitive sector.
According to sources familiar with the matter, Coinbase plans to unveil details about its prediction market and other products at its "Coinbase System Update" event on December 17. Earlier, tech researcher Jane Manchun Wong shared screenshots on platform X indicating that Coinbase’s prediction market would include betting options on Federal Reserve decisions, cryptocurrency prices, and news events.
This expansion into prediction markets is part of Coinbase’s strategy to become a "full-service exchange." CEO Brian Armstrong previously stated that the company was exploring opportunities in this space. Prediction markets often allow clients to place bets using cryptocurrencies, creating a natural synergy with trading platforms.
The prediction market sector is becoming increasingly crowded. Polymarket is set to launch U.S. operations after securing regulatory approval, while other players like Crypto.com and even former President Trump’s Truth Social are rolling out similar offerings.
**A Key Step Toward a Full-Service Exchange** Coinbase’s move aligns with its broader strategic vision. Armstrong has explicitly stated the company’s interest in prediction markets, which share a natural fit with crypto platforms due to their acceptance of digital currencies. Kalshi, for example, uses USDC stablecoin and relies on Coinbase for custody.
Armstrong himself has firsthand experience with prediction market mechanics. A popular betting theme involves predicting which terms executives will mention during earnings calls. Ahead of Coinbase’s recent earnings call, Polymarket and Kalshi users wagered on whether Armstrong would mention keywords like Bitcoin, Ethereum, blockchain, staking, and Web3. By the end of the call, Armstrong had recited all these terms, instantly creating winners and losers.
**Competition for Partnerships Heats Up** Prediction markets are turning into a new arena for tech and financial firms. Kalshi and Polymarket are not only vying for investor funds and users but also competing to serve as backend providers for other apps. Robinhood announced a partnership with Kalshi in August to launch prediction markets for college and professional football. DraftKings, which acquired Railbird Exchange last month, will also enter the space, with Polymarket providing clearing services.
It remains unclear whether Coinbase’s partnership with Kalshi is exclusive. Notably, Coinbase has invested in both Polymarket and Kalshi. Such collaborations could open new revenue streams—Polymarket currently charges no fees, while Kalshi collects transaction-based revenue.
**Kalshi Expands Its Footprint** To strengthen partnerships, Kalshi has hired Max Crowley as VP of Business Development. Crowley briefly led partnerships at Polymarket this fall and previously worked at Gopuff and Uber. Kalshi also appointed its first CFO, Saurabh Tejwani, also from Gopuff.
Tejwani has hinted at a potential IPO in the future. Last month, Kalshi raised over $300 million in a funding round led by Sequoia Capital and Andreessen Horowitz, valuing the company at $5 billion—a significant jump from its $2 billion valuation in June. Meanwhile, Polymarket secured up to $2 billion in funding from Intercontinental Exchange, NYSE’s parent company, reaching an $8 billion valuation.
**Risk Disclaimer** Markets carry risks, and investments should be made with caution. This article does not constitute personal investment advice and does not account for individual financial goals or circumstances. Readers should assess whether the opinions or conclusions herein align with their specific situation. Investments made based on this content are undertaken at one’s own risk.
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