Coinbase buys The Clearing Company, doubling down on prediction markets

"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."

"Meanwhile, trading platforms are broadening their product suites to encompass multiple asset classes under one roof as competition intensifies. This shift, analysts say, could help Coinbase reduce its reliance on crypto trading as new players crowd the market. "Prediction markets offer the company a high-engagement, high-frequency product that broadens the reasons for opening its app beyond crypto," analysts at brokerage Benchmark wrote in a note last week."

Coinbase will buy The Clearing Company, its tenth acquisition this year, to expand beyond digital assets. Prediction markets let users trade contracts tied to real-world outcomes, turning forecasts into tradable markets. Prices may reflect collective expectations more accurately than polls, though regulators worry about blurring the line between financial markets and betting. Prediction markets gained mainstream traction during the 2024 U.S. presidential race and attracted rapid investment. Trading platforms are adding multiple asset classes, enabling Coinbase to broaden product offerings, reduce reliance on crypto trading, and compete directly with brokerages by launching stocks and prediction markets.

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