Key Takeaways:
- Coinbase urged the CFTC to regulate prediction markets under existing derivatives law.
- Federal oversight could prevent fragmented state enforcement across interstate prediction markets.
- Courts, regulators, and states are still divided over jurisdiction and enforcement.
Coinbase Pushes CFTC Oversight for Prediction Markets
Coinbase Global Inc. (Nasdaq: COIN) is urging the U.S. Commodity Futures Trading Commission (CFTC) to treat prediction markets as part of the existing derivatives framework rather than a separate category. Faryar Shirzad, chief policy officer at Coinbase, shared the company’s position on X on May 3, outlining a four-point argument tied to a formal comment letter submitted to the regulator on April 30, 2026.
Coinbase’s first point was that event-based contracts already fall within current law. The company argued the CFTC has long overseen derivatives tied to real-world outcomes, meaning prediction markets do not require new authority. Shirzad said:
“ Prediction markets may look novel, but they sit comfortably within existing statutory authority—no new mandate required.”
The crypto exchange’s second point focused on function, stating these instruments, like futures, aggregate dispersed information into prices and allow participants to hedge uncertainty.
The third point addressed regulatory structure. Coinbase said Congress assigned derivatives oversight to the CFTC to ensure consistent national supervision, warning that state-level intervention could create fragmentation in interstate markets. The fourth point focused on enforcement powers. The company stated that the CFTC already has the authority to review, condition, or prohibit contracts that conflict with the public interest, including those involving manipulation or potential harm.
State Challenges Raise Stakes for Uniform Rules
This position emerges as the CFTC intensifies its claim of exclusive jurisdiction over prediction markets, arguing they qualify as “swaps” under the Commodity Exchange Act. Under Chairman Michael Selig, the agency has asserted that federal law should preempt state-level enforcement, warning that fragmented oversight would undermine a unified derivatives framework. States including Texas, Arizona, Nevada, and New Jersey have pushed back, arguing these products resemble gambling and fall under their authority to regulate such activity.
The jurisdictional dispute has escalated into active litigation involving both federal regulators and state authorities. The CFTC has sued states such as Arizona, Connecticut, Illinois, New York, and Wisconsin to block enforcement actions against platforms. At the same time, states have taken action against companies, including New York’s lawsuit against Coinbase Financial Markets and Gemini, Arizona’s criminal case against Kalshi, and cease-and-desist orders issued in Wisconsin, Connecticut, and Illinois targeting platforms like Kalshi and Polymarket. Courts have issued mixed rulings, with some decisions favoring federal preemption and others backing state authority, creating an unresolved legal divide.
Together, these developments frame Coinbase’s argument that prediction markets should remain under existing CFTC oversight with clear, uniform rules. The company emphasized that oversight should rely on established powers while refining guardrails as the market develops. Shirzad said:
“ Prediction markets are maturing. The question is not whether they fit within the law—they do—but how to ensure they develop with integrity, clarity, and appropriate guardrails.”
Coinbase signaled it will continue engaging with the Commission as the regulatory approach evolves.
