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- Coinbase says prediction markets belong under CFTC oversight, not state gambling laws nationwide.
- Lawsuits in Michigan, Illinois, and Connecticut seek court clarity on CFTC authority.
- State bans create legal uncertainty, limit innovation, and weaken U.S. market efficiency overall.
Coinbase CEO Brian Armstrong has again called for federal oversight of prediction markets, saying they fall under the Commodity Futures Trading Commission. He argued that state-level restrictions wrongly classify these platforms as gambling products. Armstrong said such actions block access to legitimate financial tools and create legal uncertainty across the United States.
Armstrong shared his position through a public social media post. He said prediction markets function as financial contracts, not games of chance. According to him, they help users assess probabilities, manage risk, and improve price discovery.
The comments come as Coinbase escalates its legal strategy. The exchange recently filed lawsuits against regulators in Michigan, Illinois, and Connecticut. The company is asking courts to confirm that the CFTC has exclusive authority over prediction markets.
Armstrong said the lawsuits aim to clarify existing federal law. He stressed that Coinbase is not asking for new rules. He said the company wants consistent enforcement of laws already passed by Congress.
Coinbase Cites Federal Law to Challenge State Authority
Coinbase argues that states lack jurisdiction over these markets. Armstrong said fragmented oversight creates confusion for users and platforms. He warned that different rules in each state discourage innovation and investment.
The company cited the Commodity Exchange Act in its filings. That law defines commodities broadly and assigns oversight to the CFTC. Congress included only a small number of explicit exclusions in the statute.
Those exclusions include onions and movie box office receipts. Armstrong said the narrow list is significant. He argued it shows Congress intended most other contracts to fall under federal authority.
Armstrong said event-based contracts were not excluded by lawmakers. He argued this includes markets tied to sports, elections, and economic outcomes. In his view, the law leaves little room for state reinterpretation.
Some states do not agree with that interpretation. Regulators in such jurisdictions present that sports-related prediction markets are similar to betting. They say that such products need to be placed under the state gaming legislation.
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Armstrong denied that stand. He explained that there was a purposeful attempt by the Congress to grant the CFTC wide jurisdiction over derivatives. According to him, federal law should not be overridden by individual states enforcing their own laws.
Fragmented State Rules Threaten Compliance and Global Positioning
Coinbase had also criticized recent crackdowns on prediction markets by the states. The company claimed that these practices destroy legal uniformity. Armstrong cautioned that a patchwork decision of fifty different regulatory efforts poses a threat of compliance.
He associated the problem with U.S. competitiveness. Armstrong claimed that the limitation of access to prediction markets disadvantages the American users in favor of their counterparts in other countries. He emphasized that confusion about regulations undermines regulatory practices and powerful surveillance.
Armstrong also dealt with questions of market integrity. According to him, federal supervision contains reporting and compliance clauses. In his opinion, high levels of centralized control enhance transparency and accountability.
CFTC has already affirmed that it has jurisdiction over event contracts. This has involved elections and macroeconomic market relations. Such trading has been termed by federal regulators as derivatives.
Armstrong reflected those sentiments. He defined prediction markets as those that amalgamate information about prices. He stated that a strong federal position would ensure the protection of the users but still leave innovation going on.
Coinbase indicated that it would continue to seek legal competence. The company maintains that there should be consistent federal control. Armstrong noted that a solution to the problem would be beneficial to the markets, regulators, and users.
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