Coinbase's "Everything Exchange" Play

Prediction Markets and Tokenized Stocks Launch December 17

Coinbase is about to redraw the boundaries of what a crypto exchange can offer. On December 17, the company will announce prediction markets (powered by Kalshi) and in-house tokenized equities—two product categories experiencing explosive growth that competitors have already started capturing.

Coinbase is positioning itself as the single destination for digital assets, event contracts, and blockchain-based stocks. The timing reflects both opportunity and urgency.

The Market Coinbase Is Entering

Prediction markets generated $28 billion in trading volume through October 2025, according to Crypto.com data—with weekly volumes hitting all-time highs above $2 billion. The 2024 U.S. election catalyzed mainstream awareness; Polymarket processed over $1 billion in weekly volume during that cycle alone and has since secured a $2 billion investment from ICE (NYSE's parent company) at a $9 billion valuation.

Kalshi has captured approximately 66% of global prediction market share as of September 2025, overtaking Polymarket through its regulated, U.S.-focused approach. The platform now powers Robinhood's event contracts and has struck similar distribution deals across major brokerages.

Coinbase enters as a distribution channel for Kalshi's infrastructure—extending reach to Coinbase's 100+ million verified users while Kalshi maintains regulatory compliance and market operations.

Tokenized Equities: The Parallel Race

Tokenized stock trading has grown 32% month-over-month, reaching $1.45 billion in monthly transfer volume according to rwa.xyz. Kraken's xStocks platform has processed over $10 billion in combined volume since launching earlier this year. Robinhood debuted tokenized U.S. equities on Arbitrum for European users in June.

Coinbase's approach differs from competitors in one critical respect: in-house issuance. Rather than partnering with external tokenization providers, Coinbase will control the entire stack—issuance, custody, and trading. This vertical integration mirrors the company's broader strategy of owning infrastructure rather than renting it.

The Coalition Forming Behind the Scenes

The same day Bloomberg reported Coinbase's December 17 plans, five major players—Kalshi, Crypto.com, Coinbase, Robinhood, and Underdog—announced formation of the Coalition for Prediction Markets (CPM). The timing was not coincidental.

The coalition's immediate focus: defending federal oversight against state-level challenges. Washington State's gambling commission declared prediction markets "unauthorized activity" this week. Massachusetts sued Kalshi in September. Multiple states have issued cease-and-desist letters arguing that event contracts on sports constitute unlicensed gambling.

The CPM's argument centers on federal preemption—CFTC-regulated markets should not be subject to conflicting state gambling laws. Sara Slane, Kalshi's head of corporate development, framed the stakes directly: "Americans deserve clarity, not 50 conflicting interpretations."

What Coinbase Is Actually Building

CEO Brian Armstrong articulated the "everything exchange" vision in May 2025: a single platform for crypto, stocks, and event contracts—the financial services equivalent of a super-app. The December 17 announcement advances that strategy on two fronts simultaneously.

For prediction markets, Coinbase gains exposure to a category where studies suggest forecasting accuracy outperforms traditional polling by roughly 30%. Event contracts aggregate information through price discovery in ways surveys cannot replicate. The 2024 election demonstrated this at scale.

For tokenized equities, Coinbase positions itself in a market projected to reach $18.9 trillion by 2033 (Ripple/BCG estimates). More immediately, Nasdaq has filed with the SEC to allow tokenized versions of listed equities—signaling that traditional finance infrastructure is moving toward blockchain settlement, not away from it.

Competitive Dynamics

The landscape has compressed rapidly:

Kalshi holds dominant market share in U.S. prediction markets and has embedded its product across Robinhood, Coinbase, and other distribution partners.

Polymarket maintains global reach with ICE distribution to institutional clients, though it remains unavailable to U.S. retail users pending full regulatory integration.

Gemini secured CFTC approval this week to launch its own prediction market platform.

DraftKings acquired Railbird Exchange. FanDuel partnered with CME Group. Fanatics launched its own prediction platform in 24 states.

Kraken acquired Backed Finance, consolidating its xStocks tokenized equity business after processing $10+ billion in volume.

Robinhood is building its own blockchain on Arbitrum specifically to support tokenized asset trading.

Coinbase enters late but with scale. The question is whether vertical integration and distribution advantages compensate for the head start competitors have established.

Strategic Implications

Three dynamics shape where this goes:

Regulatory Resolution: The CPM's formation suggests the industry expects prolonged battles with state regulators. Federal preemption arguments will likely reach appellate courts, potentially the Supreme Court. Outcome uncertainty creates both risk and optionality for platforms with compliance infrastructure already in place.

Infrastructure Consolidation: Coinbase's in-house tokenized equity issuance follows a pattern. The company controls its own Layer 2 (Base), custody infrastructure, and now asset issuance. Each integration reduces dependency on external providers and increases margin capture.

Distribution Competition: Prediction markets and tokenized equities both benefit from network effects—liquidity begets liquidity. The race isn't just about product features; it's about who captures volume first and whether that volume becomes sticky.

Coinbase's December 17 announcement won't resolve these dynamics. But it positions the company at the intersection of three converging trends: event-driven finance, asset tokenization, and platform consolidation. Whether that positioning translates to market leadership depends on execution against competitors who've already been building.