Coinbase Sees ‘Transformative Period’ Emerging for Prediction Markets

• Coinbase sees prediction markets reaching “greater scale and liquidity.”
• Says fragmentation could spur evolution of prediction market aggregators.
• Cryptocurrency brokerage giant recently unveiled its prediction market plans.

Coinbase Global (NASDAQ: COIN), the cryptocurrency brokerage firm that recently announced its prediction markets push, said the event contracts industry is on the cusp of a multi-year “transformative period” in which the derivatives will evolve from “niche speculative tools” to mainstream financial instruments.

The company made those remarks in its 2026 Crypto Market Outlook. In the report, authored by global head of research David Duong and research associate Colin Basco, Coinbase notes enhanced liquidity and scale could usher in a new era of prediction markets adoption.

This could drive further maturity in their market structure, governance, and regulatory oversight, solidifying their role within the broader financial ecosystem,” according the report.

Coinbase, the largest US-based cryptocurrency brokerage house, announced earlier this month it’s offering prediction markets on its trading platform via a partnership with Kalshi.

Prediction Market Fragmention Could Spark Aggregation

In recent months, it’s felt as though as hardly a day goes by without company declaring prediction market plans with much of that population growth arriving by way of cryptocurrency brokerage firms or traditional online sportsbook operators.

“This could herald the advent of prediction market aggregators, which may emerge as the dominant interface layer for the sector,” Coinbase notes. “By connecting to major prediction market protocols via smart contract interfaces and APIs, aggregators will be instrumental in consolidating billions of dollars in fragmented weekly volume and provide users with a unified, real-time view of event odds.”

Aggregation could be integral in terms of bring more institutional investors into arena as those market participants are considered essential for supporting prediction markets adoption while bolstering liquidity.

Betting Tax Change Could Benefit Prediction Markets

As has been widely noted, President Donald Trump’s One Big Beautiful Bill (OBBB) contains a provision that cuts bettors’ deductible losses to 90% of winnings, down from 100%. That could bring more bettors into the prediction markets fold because as has also been widely discussed, tax treatment of event contracts is still up in the air.

Coinbase says it’s possible that prediction markets could emerge as a tax-friendly alternative to casinos and sports wagering.

“This change, while seemingly innocuous, could lead to taxpayers being taxed on phamtom income, even when their actual winnings are small or they have incurred a net loss,” observes Coinbase. “Consequently, prediction markets, which utilize financial contracts akin to derivatives, could emerge as a more tax-advantageous substitute to traditional sportsbooks and casinos.”