Coinbase Challenges U.S. States’ Prediction Market Regulations

Coinbase filed lawsuits on December 19, 2025, against regulators in Connecticut, Illinois, and Michigan, asserting that prediction markets on its platform are federally regulated by the CFTC.

The lawsuits emphasize federal jurisdiction over prediction markets, aiming to clarify compliance boundaries for cryptocurrency platforms, though no immediate market reactions or changes in crypto asset trading have been reported.

On December 19, 2025, Coinbase filed lawsuits in Connecticut, Illinois, and Michigan. The lawsuits aim to affirm that prediction markets fall under federal CFTC jurisdiction, not state gaming laws, according to Coinbase’s assertion.

Paul Grewal, Coinbase’s Chief Legal Officer, announced the lawsuits via X (Twitter). He emphasized that the lawsuits seek “clarity on the regulatory landscape for prediction markets and their treatment under federal law.” The legal action focuses on establishing CFTC’s exclusive authority, which Coinbase argues is crucial for prediction markets operations.

These lawsuits target efforts to regulate prediction markets that are financial derivatives. The move by Coinbase highlights the ongoing state vs. federal jurisdictional debate within the cryptocurrency industry.

Financial impacts remain indirect as the litigation aims at clarifying regulatory landscapes rather than affecting specific crypto assets or transactions. The case may set a precedent for federal jurisdiction over similar markets.

Crypto community and experts have not significantly reacted as the focus remains on legal precedents. The main impact is anticipated in regulatory clarity rather than immediate market shifts.

The lawsuits concern prediction markets, reflecting broader regulatory challenges faced by the crypto industry. If successful, this can enhance CFTC’s role, influencing regulatory approaches. Historical trends show a continued push for clearer regulatory frameworks in digital finance.