Coinbase is buying The Clearing Company to get into prediction markets and broaden its product range beyond just trading cryptocurrencies.
Coinbase has agreed to buy The Clearing Company, a new company that provides on-chain prediction markets for digital assets, politics, sports, and entertainment. Coinbase is working on a “Everything Exchange” that will have a lot of different investment products.
Coinbase says it has reached an agreement to buy The Clearing Company, and the deal should be done by January. The deal’s money specifics were not made public.
Since its start earlier this year, the Clearing Company has changed quickly. In a funding round, Coinbase Ventures, Union Square Ventures, Haun Ventures, and many more venture firms and angel investors poured $15 million into the startup.
People that have worked in the cryptocurrency, prediction markets, and cloud infrastructure industries for a long time established The Clearing Company, which is an on-chain prediction markets platform. Toni Gemayel, who has worked on prediction market systems like Polymarket and Kalshi in the past, started it. People on its bigger team have worked on companies like Polymarket, 0x, Dune, and Coinbase.
Coinbase said it will buy the company less than a week after it said it would enter the prediction market with Kalshi as part of its bigger “Everything Exchange” plan.
Coinbase also said that it would start offering stock trading, which would add to the breadth of items it offers beyond digital assets.
In the end, the purchase illustrates that event-based markets are getting closer to the regulated financial mainstream. New kinds of markets are relying more and more on cryptocurrency infrastructure.
Markets linked to real-world events, according to a Coinbase spokesperson, are “a natural extension of modern financial infrastructure.”
This momentum is occurring simultaneously with changes in regulations. Last month, The Clearing Company requested the US Commodity Futures Trading Commission for permission to become a Derivatives Clearing Organisation. This move could help prediction markets become more common in regular financial systems.
Source: Haun Ventures
Why is Coinbase betting on prediction markets?
Coinbase is getting more involved in prediction markets because it thinks they are a major growth opportunity, not simply a small niche.
Cointelegraph published Coinbase’s most recent market outlook report, which said that prediction markets are one of the most essential sectors to follow until 2026. The report said more people were using it, the rules were clearer, and there were more real-world examples.
According to Coinbase’s report, US President Donald Trump’s “One Big Beautiful Bill” has a tax provision that would lower the amount of gambling losses that can be deducted from profits from 100% to 90%.
Coinbase said that even though the change seems small, it could mean that people have to pay taxes on “phantom income,” which is money that doesn’t really exist, even if they don’t win or lose much.
Coinbase noted that in this case, prediction markets, which employ contracts that are similar to derivatives, would be a better method to wager than regular sportsbooks and casinos, especially if they are taxed differently.
Prediction markets are still a new field, but a few huge businesses already own a lot of it. Of these, Polymarket is the most important. Polymarket, a decentralised platform built on the Polygon network, enables individuals to wager on political, economic, and cultural outcomes using blockchain-based contracts.
US officials are closely monitoring Kalshi, as it has emerged as a significant centralised player. DraftKings, a publicly traded sports betting startup, has also gotten into the prediction markets business and plans to provide crypto-linked contracts in the future.
DraftKings would be one of many companies that are interested in the region. Others are Bitnomial Clearinghouse, a crypto exchange and derivatives clearinghouse, and Gemini.