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Coinbase is preparing to launch an internal prediction market run by Kalshi, a source familiar with the matter told CNBC — a strategic move to expand the number of asset classes available on the cryptocurrency exchange at a time when some investors are wary of digital assets.
The source said that Coinbase and Kalshi will soon officially announce the prediction market, with the news possibly being announced as early as next week. The partnership is not exclusive, but Kalshi will be the only prediction market operator working with Coinbase when the product launches, according to the source.
Rumors have been circulating about Prediction's launch for almost a month. An alleged screenshot of Coinbase's prediction market dashboard shared by Silicon Valley researcher Jane Manchun Wong in a Nov. 18 X post gave some clues about the new product.
The Information first reported on November 19 that Coinbase plans to launch Kalshi-powered prediction markets, adding that the exchange will unveil the new product at its “Coinbase System Update” event on December 17. Bloomberg published a similar report on Thursday, citing a source familiar with the matter, adding that Coinbase would also announce a tokenized stock offering at the presentation.
Coinbase declined to confirm the reports to CNBC but said it would track the event next week. The company did not comment on a timeline for when its prediction markets would go live for its users.
Coinbase's upcoming product launches underscore its ambition to transform itself into an “everything exchange” or a one-stop shop for trading all types of assets, including crypto tokens, tokenized stocks and event contracts. In May, CEO Brian Armstrong announced the “everything exchange” vision to investors and said Coinbase wanted to become a leading financial services app within the next decade.
The trading platform has this goal in its sights as it faces increasing competition from competitors such as: B. faces Robinhood, Gemini and octopuses. All three launched tokenized stock offerings for users outside the U.S. last year and have also explored prediction markets to varying degrees.
Coinbase's moves to expand the financial instruments available to its users also come at a time when investor sentiment toward digital assets is cooling. A series of liquidations of heavily leveraged positions in digital assets in mid-October triggered multiple setbacks in the crypto market and prompted investors to switch from tokens to gold and other safe-haven assets.
Bitcoin fell to around $85,000 in early December, reaching its lowest level since last March. The token was last trading at $89,951, down 23% over the past three months. Coinbase has also fallen more than 16% in the last three months.
The deal also underscores U.S.-based prediction market operator Kalshi's push to embed its event deals across different brokerages, expanding its reach as the prediction market space becomes increasingly competitive.
This year, Kalshi integrated several of its prediction markets into the Robinhood trading platform as part of a non-exclusive partnership between the companies. A source familiar with the matter told CNBC that Kalshi has also been in discussions with several other major brokers, including those in the crypto industry, with the aim of striking more deals like the one she struck with Robinhood and now Coinbase.