Coinbase is preparing to unveil its own prediction market platform, utilizing technology from Kalshi. This move is part of a broader strategy to diversify the types of assets available on the cryptocurrency exchange, especially as some investors exhibit caution towards digital assets.
According to a source familiar with the development, Coinbase and Kalshi are expected to officially announce their collaboration soon, possibly as early as next week. Although the partnership is not exclusive, Kalshi will initially be the sole prediction market operator working with Coinbase when the new product is launched.
Speculation about this launch has been circulating for close to a month. Jane Manchun Wong, a researcher in Silicon Valley, shared a purported screenshot of Coinbase's prediction markets dashboard on an X post dated November 18, offering hints about the upcoming feature.
The Information reported on November 19 about Coinbase's plans to introduce prediction markets powered by Kalshi, mentioning that the announcement of the new product will take place at the 'Coinbase System Update' event scheduled for December 17. Similarly, Bloomberg published a report on Thursday, indicating that Coinbase may also reveal a tokenized stock offering during this event.
While Coinbase declined to confirm these reports to CNBC, the company advised viewers to attend the upcoming event next week for more details. No specific timeline was given for when the prediction markets will become available for its users.
This latest development highlights Coinbase's ambition to evolve into an 'everything exchange,' a comprehensive platform for trading various assets such as crypto tokens, tokenized stocks, and event contracts. In May, CEO Brian Armstrong outlined this vision, stating that Coinbase aims to become a leading financial services app within the next decade.
Coinbase is pushing towards this goal amidst growing competition from platforms like Robinhood, Gemini, and Kraken. These platforms have introduced tokenized equity offerings to users outside the U.S. over the past year and have been exploring prediction markets to various extents.
The move to broaden the range of financial instruments available also coincides with a cooling sentiment on digital assets from investors. This change follows a round of liquidations of highly-leveraged digital asset positions in mid-October, leading to market retreats and prompting investors to shift away from tokens towards safer options like gold.
During this period, Bitcoin's value dropped to approximately $85,000 in early December, marking the lowest level since last March. It last traded at $89,951, reflecting a 23% decrease over three months, while Coinbase's value also fell by more than 16% in the same period.
Kalshi, a U.S.-based prediction markets operator, is also looking to increase its presence by embedding event contracts into various brokerages. This comes as the prediction markets space becomes increasingly competitive.
This year, Kalshi integrated several of its prediction markets into trading platform Robinhood as part of a non-exclusive partnership. The company is also in discussions with other major brokerages, including those in the crypto industry, to strike more agreements like it has with Robinhood and now Coinbase, according to a source who spoke to CNBC.