Coinbase Poised to Partner with Kalshi on Prediction Markets
Coinbase Global (NASDAQ: COIN) is likely to collaborate with Kalshi when it opens its prediction markets platform, which might happen soon.
What looks to be a slide from an unreleased Coinbase investor presentation was received by Jane Wong, a Silicon Valley blogger and consultant who revealed that Coinbase is developing an event contracts platform. A disclaimer box that mentions a relationship with Kalshi is included.
"Coinbase is subject to US regulatory oversight by the Commodities Futures Trading Commission (CFTC). Prediction Markets are offered by Coinbase Financial Markets through KalshiEX LLC,” according to the cryptocurrency broker’s presentation.
A slide from a Coinbase presentation indicating it could work with Kalshi.
Coinbase and Kalshi established a partnership last month whereby the former will hold the USDC stablecoin on behalf of the prediction markets operator. According to reports on Thursday, Coinbase may announce its intentions for event contracts as early as next week.
Coinbase Collaboration Supports Kalshi's Crypto Initiatives
Kalshi has stated that it aspires to be the preferred prediction market for the digital currency community, even if it is not yet as focused on cryptocurrencies as competitor Polymarket.
“6 months for Kalshi to be in every major crypto app or I have failed at my job,” said Kalshi Head of Crypto John Wang in a new post on X.
These goals and the possible collaboration with Coinbase come at a time when the prediction market sector's connections to cryptocurrencies are expanding.While Robinhood Markets (NASDAQ: HOOD), which provides cryptocurrency trading, has a longstanding partnership with Kalshi and accounts for an estimated 25% to 35% of that exchange's volume, Crypto.com and Polymarket are two of the most established competitors in the market.
Earlier this week, Gemini Space Station's (NASDAQ: GEMI) Gemini Titan business received approval from the CFTC to provide clients with yes/no event contracts, adding the junction of cryptocurrency and prediction markets.
The Significance of Kalshi's Coinbase Relationship
The prediction market operator will benefit from a Coinbase/Kalshi cooperation in a number of ways, including the fact that the cryptocurrency broker has 10.8 million monthly active users and 105 million global accounts.
The collaboration may also lessen the pain of potentially losing Robinhood's business. The well-known trading platform said last month that it is collaborating with Susquehanna International Group, a market maker, to provide what is essentially its own prediction markets platform.
Although Robinhood has stated that it will continue to collaborate with Kalshi, it is unclear how long this cooperation will persist given that the two are now rivals. In accordance with the initial agreement between the two parties, Kalshi gave Robinhood event contracts to offer its clients, with the broker's clients effectively serving as volume enhancers and liquidity providers.
The two businesses divide the arrangement's profits evenly, and although it's unclear if it will end completely, Kalshi's partnership with Coinbase would somewhat mitigate the company's risk associated with Robinhood.
