Coinbase doubles down on prediction markets with deal for The Clearing Company
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 let users buy and sell contracts tied to the outcomes of real-world events, ranging from elections and economic data to sports and policy decisions, effectively turning investors' forecasts into tradable markets.
Supporters say the prices can reflect collective expectations more accurately than polls or forecasts, while critics argue the products blur the line between financial markets and betting, drawing growing scrutiny from regulators.
Last week, Coinbase launched its prediction markets platform and said it will start letting users trade stocks, positioning it as a direct competitor to brokerages such as Robinhood and Interactive Brokers.
Prediction markets surged into the mainstream during the 2024 U.S. presidential race between Donald Trump and Kamala Harris, and have since drawn rapid interest and investments from traditional financial heavyweights and newer fintech players alike, who are seeking exposure to the fast-growing space.
Meanwhile, trading platforms are broadening their product suites to encompass multiple asset classes under one roof as competition for retail trading volume intensifies. This shift, analysts say, could help Coinbase reduce its reliance on crypto trading as new players crowd the market.
The deal for The Clearing Company, which is expected to close in January, marks Coinbase's tenth 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 in October with a roughly $375 million cash-and-stock deal for investment platform Echo.
Its shares were last up 3% in morning trading, in line with gains across U.S.-listed crypto stocks, which rose in tandem with bitcoin prices.
(Reporting by Manya Saini in Bengaluru; Editing by Shinjini Ganguli)
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