Coinbase Global, Inc. filed lawsuits on December 18, 2025 against the state gaming regulators of Michigan, Illinois and Connecticut, arguing that the Commodity Futures Trading Commission has exclusive jurisdiction over prediction markets and that state authorities lack the authority to regulate them.
The lawsuits are part of Coinbase’s broader strategy to launch prediction‑market products on its platform, a move that follows a partnership with Kalshi, a CFTC‑regulated prediction‑market operator. By securing federal jurisdiction, Coinbase seeks to avoid a patchwork of state rules that could delay or complicate the January 2026 rollout of the new service.
Coinbase’s Q3 2025 results show a strong performance that underpins the company’s confidence in the expansion. Total revenue reached $1.9 billion, up 30% from the prior quarter, driven by a 30% rise in consumer‑trading revenue to $844 million, a 122% jump in institutional‑transaction revenue to $135 million, and a 14% increase in subscription and services revenue to $747 million. Net income of $433 million and adjusted EBITDA of $801 million beat analyst expectations, largely due to higher trading volumes and a favorable mix of high‑margin subscription services.
Chief Legal Officer Paul Grewal emphasized that prediction markets are distinct from gambling and fall under CFTC jurisdiction, not state gaming regulators. CEO Brian Armstrong reiterated Coinbase’s vision of an “everything exchange,” stating that the company is moving beyond crypto trading to offer a full suite of financial products, including stocks, ETFs, derivatives and prediction markets.
While the lawsuit itself is a strategic step, investor sentiment has been tempered by a broader downturn in the cryptocurrency market, particularly the decline in Bitcoin’s price, which has reduced trading volumes and affected Coinbase’s revenue mix. Analysts have adjusted their expectations for the company’s future performance, reflecting concerns over market volatility and competitive pressure from rivals such as Robinhood and Gemini.
The legal action could streamline regulatory oversight for Coinbase’s prediction‑market launch, potentially opening a new revenue stream beyond crypto‑trading fees. However, the company still faces headwinds from crypto market volatility, competitive pressure, and the need to demonstrate that its new products can attract sufficient user activity to justify the investment in regulatory compliance and platform development.
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