Coinbase Doubles Down on Prediction Markets, Acquiring the Clearing Company

Coinbase is accelerating its expansion into prediction markets with the acquisition of The Clearing Company. This move should further establish the crypto exchange as a multi-asset trading platform rather than a pure-play digital currency venue. Despite this milestone expansion, prediction markets remain embroiled in legal challenges, resulting in ongoing uncertainty.

​Prediction Markets Represent a Promising New Vertical

​This deal marks Coinbase’s tenth acquisition in 2025 as the company seeks to diversify away from the volatile cryptocurrency trading sector. While financial terms were not disclosed, the transaction is expected to finalize in January, bolstering Coinbase with much-needed crucial infrastructure and expertise in event-based trading. This move is critical for the company’s ambitions to compete with established prediction market operators.

Interest in prediction markets surged during the 2024 US presidential election and has continued to grow as retail investors increasingly see them as the next big market disruption. Even retail betting platforms like FanDuel and DraftKings have taken notice, launching bespoke prediction apps across multiple states to secure an early market lead.

Earlier this month, Coinbase launched its own prediction markets platform and signalled its intentions to branch out into stock trading. This move places it in direct competition with companies like Robinhood and Interactive Brokers. According to J.P. Morgan analysts, this strategy aims to attract more consistent customer engagement, reducing Coinbase’s vulnerability to boom-and-bust trading activity.

​Regulatory Uncertainty Remains a Pressing Issue

​For Coinbase, the Clearing Company provides more than just a new product line. Analysts note that this move should bolster the fundamentals behind event contracts and give Coinbase increased control over execution, settlement, and compliance. With more than 100 million registered users worldwide and roughly 11 million monthly active customers, a successful foray into this market could help Coinbase challenge established players such as Kalshi.

​However, the acquisition aligns with rising regulatory friction. Coinbase has already taken legal action against regulators in Connecticut, Illinois, and Michigan, seeking to prevent state gambling regulators from interfering with what it sees as products under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC). Coinbase argued that state enforcement efforts pose a direct threat to its expansion plans.

​Tensions are rising throughout the industry, with Kalshi and other prediction platforms embroiled in multiple legal challenges. Coinbase likely hopes that acquiring The Clearing Company will provide it with the scale and infrastructure to emerge as a leader in this rapidly evolving market. While regulatory uncertainty remains, the company is betting that prediction markets will be the next big thing.