Coinbase is urging the U.S. Commodity Futures Trading Commission to keep prediction markets inside the current derivatives framework instead of treating them as a separate regulatory category. Chief Policy Officer Faryar Shirzad outlined the company’s stance on X on May 3, tied to a formal comment letter submitted to the agency on April 30.
Four arguments center on existing derivatives authority
Coinbase said event-based contracts already fit within federal law. In its view, the CFTC has long supervised derivatives linked to real-world outcomes, so prediction markets do not require any new statutory power. Shirzad said the products may appear novel, but they sit within existing legal authority.
The company’s second point focused on what these contracts do in practice. Like futures, Coinbase argued, they turn dispersed information into prices and give market participants a way to hedge uncertainty. The third point addressed regulatory design: Congress assigned derivatives oversight to the CFTC to maintain national consistency, and state intervention in interstate markets could fracture that system.
Its fourth point dealt with enforcement. Coinbase said the CFTC already has the authority to review contracts, attach conditions, or block products that conflict with the public interest, including cases involving manipulation or potential harm. Shirzad wrote: “Prediction markets may look novel, but they sit comfortably within existing statutory authority—no new mandate required.”
Federal and state authorities remain in an active jurisdiction fight
Coinbase’s comments come as the CFTC is pressing its claim of exclusive jurisdiction over prediction markets, arguing that these products qualify as “swaps” under the Commodity Exchange Act. Under Chairman Michael Selig, the agency has said federal law should preempt state enforcement and has warned that fragmented oversight would weaken a unified derivatives regime. States including Texas, Arizona, Nevada, and New Jersey have pushed back, saying the products resemble gambling and fall within state authority.
The dispute is already being fought in court. According to the report, the CFTC has sued Arizona, Connecticut, Illinois, New York, and Wisconsin to stop enforcement actions against platforms. States have moved in the opposite direction, including New York’s lawsuit against Coinbase Financial Markets and Gemini, Arizona’s criminal case against Kalshi, and cease-and-desist orders in Wisconsin, Connecticut, and Illinois aimed at platforms such as Kalshi and Polymarket. Court rulings have gone both ways, leaving the legal split unresolved.
Coinbase says the market is maturing and needs clear guardrails
Coinbase framed the issue as a matter of regulatory clarity rather than new law. The company said prediction markets should remain under existing CFTC oversight while guardrails are refined as the market develops. Shirzad wrote: “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 said it will continue engaging with the Commission as the regulatory approach evolves.