Coinbase submitted a formal letter to the Commodity Futures Trading Commission (CFTC) on April 30, aiming to shape U.S. prediction market regulation. The filing responds to the agency's Advance Notice of Proposed Rulemaking and arrives amid legal disputes, including a Wisconsin lawsuit.
No New Mandate Needed for Prediction Markets
Faryar Shirzad, Coinbase's Chief Policy Officer, argued that event-based contracts are not new and align with long-regulated futures markets. Both systems aggregate dispersed information into prices and support risk management. He stressed that these products fall within existing statutory authority and require no new mandate from the CFTC.
Shirzad further explained that the CFTC already holds authority to review or prohibit harmful contracts. That power, he noted, should be used for edge cases rather than restricting the entire category.
Four-Point Position Strengthens Coinbase's Case
Shirzad laid out four key points to reinforce Coinbase's stance: First, prediction markets fit within current law and regulatory scope. Second, the CFTC's existing authority to block harmful contracts should not be expanded unnecessarily. Third, market integrity must be protected through enforcement against insider trading. Fourth, the agency should maintain a principles-based framework and clarify how it will block contracts deemed against the public interest.
Coinbase urged the CFTC to keep consistent safeguards for users—whether they trade directly or through intermediaries.
Federal-State Tensions Escalate
The letter comes as tensions rise between federal and state regulators. The CFTC has filed lawsuits against Wisconsin and New York over enforcement actions. Wisconsin authorities have pursued felony charges under state gambling laws against platforms including Coinbase, Kalshi, Robinhood, Polymarket, and Crypto.com.
Coinbase pointed out that these platforms operate under federally regulated derivatives structures, and fragmented state actions risk disrupting national oversight. The company argued that Congress assigned derivatives regulation to the CFTC for consistent supervision.
As lawmakers review the CLARITY Act, Coinbase's filing adds to its broader policy engagement. Senators Thom Tillis and Angela Alsobrooks have been negotiating related provisions.