Coinbase Sues 3 States to Block Prediction Market Oversight

Coinbase, the largest U.S. cryptocurrency exchange, filed lawsuits Thursday against regulators in Michigan, Illinois and Connecticut, seeking to block state oversight of its planned prediction market offerings. The legal actions, announced one day after Coinbase revealed its entry into the sector through a partnership with the CFTC-regulated platform Kalshi, argue that federal law grants the Commodity Futures Trading Commission exclusive jurisdiction over such markets, preempting state gambling authorities.

The suits request court orders to affirm that prediction markets qualify as commodities under the Commodity Exchange Act, shielding them from state enforcement. Coinbase Chief Legal Officer Paul Grewal described the filings as a request to "confirm what is clear," stating in a post on X that prediction markets fall under the CFTC's purview, not individual state gaming regulators. "State efforts to control or outright block these markets stifle innovation and violate the law," Grewal wrote. He emphasized the distinction from traditional gambling, noting that prediction markets serve as neutral exchanges matching buyers and sellers, unlike sportsbooks that profit from customer...