Coinbase is preparing to unveil an in-house prediction market in collaboration with Kalshi, according to a source who informed CNBC. This strategic initiative aims to broaden the range of asset classes on the cryptocurrency exchange at a time when some investors are moving away from digital assets.
The source indicated that Coinbase and Kalshi are expected to officially announce this new venture soon, with an announcement possibly occurring as early as next week. Although the partnership is not exclusive, Kalshi will initially be the sole prediction market operator collaborating with Coinbase upon the product's launch.
Speculation about Coinbase's prediction market release has circulated for almost a month. Jane Manchun Wong, a Silicon Valley researcher, shared an alleged screenshot of Coinbase’s prediction market dashboard in a social media post on November 18, providing hints about the forthcoming product.
The Information reported on November 19 that Coinbase plans to launch prediction markets powered by Kalshi and will reveal the new product during its "Coinbase System Update" event on December 17. Bloomberg echoed this report, noting that Coinbase might also announce a tokenized stock offering at the event.
While Coinbase did not confirm these reports to CNBC, the company encouraged tuning into its event next week. However, it did not specify when the prediction markets would be available to users.
These product launches highlight Coinbase's efforts to redefine itself as an "everything exchange," offering a comprehensive platform for trading various assets, including cryptocurrencies, tokenized stocks, and event contracts. In May, CEO Brian Armstrong shared this vision with investors, aiming for Coinbase to become a leading financial services app within the next decade.
Coinbase is pursuing this objective while facing increased competition from companies like Robinhood, Gemini, and Kraken, all of which have launched tokenized equity offerings beyond the U.S. and are exploring prediction markets to different degrees.
This initiative also coincides with a cooling investor sentiment towards digital assets. In mid-October, significant liquidations of highly leveraged digital asset positions triggered several pullbacks in the crypto market, causing investors to shift away from tokens towards gold and other safe-haven assets.
Bitcoin recently dropped to around $85,000, its lowest since last March, and was last trading at $89,951, marking a 23% decline over the past three months. Coinbase's value has also decreased by more than 16% during the same period.
The partnership also highlights the efforts of U.S.-based prediction markets operator Kalshi to integrate its event contracts across various brokerages, expanding its presence in an increasingly competitive prediction markets sector.
This year, Kalshi has integrated several of its prediction markets into the trading platform Robinhood, as part of a non-exclusive partnership between the companies. Kalshi is reportedly in talks with other major brokerages, including those in the crypto sector, aiming to secure more collaborations like those with Robinhood and now Coinbase, according to a source known to CNBC.