Discussion on Coinbase’s Prediction Markets
David Schwartz, the Chief Technology Officer of Ripple, recently engaged in a lively discussion on the social media platform X, sparked by developments surrounding Coinbase’s introduction of prediction markets. On Friday, Coinbase announced its legal actions against several key states in the U.S., including Connecticut, Michigan, and Illinois. This legal move follows their launch of prediction markets, which are operated in collaboration with Kalshi, a U.S.-based prediction markets operator.
Coinbase’s Legal Actions
In a system update shared on December 17, Coinbase revealed that it plans to allow its customers to trade event contracts on its platform, with the launch scheduled for January 2026. This initiative has prompted the legal filing, as Coinbase asserts that certain state regulations, particularly in Illinois, are prohibitive to its clientele’s access to these event contracts. The exchange categorizes event contracts as specialized derivative instruments, which are subject to rigorous federal regulation and can be traded exclusively on registered exchanges through licensed intermediaries.
Challenges and Misconceptions
As a result of these restrictions, Coinbase is fighting against the application of gambling laws which they believe are incorrectly being applied to these contracts. Predictions made by users on X include the possibility of Coinbase encountering challenges in their lawsuits, leading to a conversation that questions the essence of what constitutes an event contract. In response, Schwartz clarified misconceptions by emphasizing the distinction between the contract itself and the event it is based on. He stated that the derivative classification of a contract hinges on the characteristics of the underlying event, and defined event contracts as instruments allowing parties to speculate on future occurrences related to various sectors, including economics, political elections, climate change, and sports.
Upcoming XRPL Lending Protocol
Moreover, in other news related to XRP, an upcoming XRPL Lending Protocol is set to launch, enabling on-ledger lending capabilities for institutions and allowing XRP holders to earn competitive yields. Amendments related to this protocol are expected to be voted on by validators by late January 2026, marking a significant progression in establishing credit markets within the XRPL framework.
