Coinbase CEO hails prediction markets “very exciting” as he enters debate

Coinbase co-founder and CEO Brian Armstrong has championed prediction markets as “very exciting” and a “better source of truth” than traditional media outlets as he gave his thoughts on the emerging vertical last week.

Speaking following the release of the Nasdaq-listed cryptocurrency exchange platform’s Q4 results, which revealed revenue of $2.3bn (£1.8bn), Armstrong said that while no event contracts launches were forthcoming, he admired the potential.

Responding to a question posed by Mizuho Securities analyst Dan Dolev, he said: “I think you’re referring to prediction markets. We have nothing to announce today on that front, but I do think prediction markets are very exciting.  

“I touched on it a bit in my opening remarks, but I think the world got a wake-up call on prediction markets in this recent [US] election. 

“Some of these were in the top free downloaded apps in the app stores during the election, and they called the election correctly, far in advance of every other traditional source that was just flat wrong.” 

Armstrong continued: “Everybody is worried about misinformation. They’re worried about bias. And the beautiful thing about these prediction markets is that people have real skin in the game.  

“I actually think it’s a better source of truth than what we’re seeing in many traditional media publications.” 

The recent rise in popularity surrounding event contracts and the listing of prediction markets has snowballed since November’s US presidential election, when platforms were far quicker to indicate Donald Trump as the victor than the polls.

Traditional media polling had had Trump and Democratic candidate Kamala Harris neck-and-neck well into the night.

During the presidential election, by the time Donald Trump’s victory was confirmed, Polymarket, which is not licensed in the US, recorded $3.2bn in event traded contracts on the result.

Meanwhile, Kalshi, which was legally allowed to offer contracts in the US on the election, reported $400m worth of trades on the race for the White House, while retail brokerage Robinhood also joined the fray, with more than 500 million election contracts traded on its platform.

Following the success of the US presidential election prediction markets, sports event contracts were added to sites. Firstly, Crypto.com launched a product just before Christmas, before being joined by Kalshi. Robinhood added Kalshi-powered markets for the Super Bowl, before a volte face after pressure from the regulator, the Commodity Futures Trading Commission (CFTC).

Kalshi and Crypto.com had both been asked by the CFTC to pull the markets, although the pair refused to do so.

Kalshi traded $27m on the Super Bowl this month. While leading sportsbooks never reported their turnover on the encounter between Kansas City Chiefs and the Philadelphia Eagles, FanDuel accepted more than 16 million bets and DraftKings reported more than 2.5 million active customers during the game.

More recently, Robinhood CEO Vladimir Tenev insisted that the retail brokerage firm will be at the forefront of the sports event contract space. 

Despite pulling its product at the request of the CFTC, Tenev explained: “We believe in it [sports event contracts], and we’re going to be a leader.” 

“I think prediction markets are the future […] not just as an active trading asset, but also news and information.  And Robinhood’s going to be right there leading the way. I think we’re going to continue to innovate.” 

There has been little suggestion that the rollout of event contracts, both sporting and political editions, will slow down despite the controversy. 

Brian Quintenz has been nominated by President Trump to lead the CFTC as chairman, replacing acting chair Caroline Pham in the role. 

Quintenz has ties to both Kalshi and Crypto.com, serving as a board member for the former, while his predecessor at the CFTC heralded prediction markets as an “important new frontier”.