Dec 22 (Reuters) – Coinbase (COIN) said on Monday it will buy prediction markets startup The Clearing Company, as the crypto exchange looks to expand beyond its core digital assets business.
Prediction markets allow users to “buy and sell contracts linked to the outcomes of real-world events, from elections and economic data to sports and political decisions, effectively turning investors’ forecasts into tradable markets.
Supporters say prices can reflect collective expectations more accurately than surveys or forecasts, while critics argue the products blur the line between financial markets and gambling, leading to increasing scrutiny from regulators.
Last week, Coinbase launched its market prediction platform and said it will begin allowing users to trade stocks, positioning it as a direct competitor to brokers like Robinhood and Interactive Brokers.
Prediction markets gained popularity during the 2024 US presidential race between Donald Trump and Kamala Harris, and have since rapidly attracted interest and investment from both traditional financial heavyweights and new fintech players, seeking exposure to this fast-growing space.
Meanwhile, trading platforms are expanding their product suites to encompass multiple asset classes under one roof as competition for retail trading volume intensifies. This change, analysts say, could help Coinbase reduce its reliance on cryptocurrency trading as new players fill the market.
The deal for The Clearing Company, which is expected to close in January, marks Coinbase’s 10th acquisition in 2025. It did not disclose the terms of the transaction.
Among its notable deals this year, Coinbase agreed in May to buy derivatives exchange Deribit for $2.9 billion, and followed up in October with a deal for about $375 million in cash and stock for investment platform Echo.
Its shares were last up 3% in morning trading, in line with gains in U.S.-listed cryptocurrency stocks, which rose in tandem with bitcoin prices.
(Reporting by Manya Saini in Bengaluru; Editing by Shinjini Ganguli)