Coinbase Urges CFTC to Keep Prediction Markets Under Federal Control

Coinbase has submitted a formal comment letter to the U.S. Commodity Futures Trading Commission (CFTC), arguing that prediction markets should remain under federal derivatives oversight rather than being governed state-by-state. Coinbase policy chief Faryar Shirzad says event-based contracts are derivatives and that Congress set federal authority to avoid “regulatory conflict” in inherently interstate markets. Coinbase also critiques how CFTC Rule 40.11 is being applied. It argues the rule is often treated like a blanket ban, while the statute requires a two-step test: first, whether a contract falls into enumerated categories (e.g., terrorism, assassination, gaming), and second, whether the specific contract is against the public interest. Coinbase wants clearer rule text and updated exchange guidance on how platforms can demonstrate contracts are not readily susceptible to manipulation. The filing lands as prediction markets face intensifying legal pressure. New York’s attorney general sued Coinbase on April 22. Coinbase also challenged state actions in Illinois, Michigan, and Connecticut in December 2025, where gambling-law enforcement was used to curtail similar offerings. Coinbase further cites a Federal Reserve staff paper suggesting prediction markets can match or outperform established forecasting benchmarks, including New York Fed survey data. For traders, the key takeaway is that a clearer, uniform CFTC framework for prediction markets could reduce policy-driven uncertainty and fragmentation risk—potentially dampening volatility tied to regulatory headlines.