Coinbase's legal chief criticized state regulators for misleading predictions about market regulation issues.

Ryan VanGrack, Coinbase's Vice President of Legal Affairs and Head of Global Litigation, stated that some U.S. state governments are "misleading the public" and misinterpreting federal law in their restrictions on prediction market businesses, attempting to expand state-level regulatory power. Following its recent partnership with prediction market platform Kalshi to launch related products, Coinbase has filed lawsuits in Connecticut, Illinois, Michigan, and Nevada. Regulatory agencies in these states previously issued stop-loss orders or warnings, deeming contracts related to sports events illegal betting. VanGrack stated that these actions pose a "real and imminent threat" to users, prompting Coinbase to seek a federal court ruling. VanGrack pointed out that the U.S. Commodity Exchange Act explicitly grants the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction over the derivatives market, and prediction market products, including event contracts, should fall under federal regulation. He believes that the states' attempts to exclude sports event contracts from the definition of derivatives lack legal basis. VanGrack denied claims by some state governments that the market would lack regulation without state-level intervention, emphasizing that the CFTC has long overseen the multi-trillion-dollar derivatives market and has already issued enforcement warnings regarding insider trading in event contracts. Coinbase also pointed out that exchange-based prediction markets are fundamentally different from traditional sports betting. In CFTC-regulated exchanges like Kalshi, prices are determined by market participants, while traditional betting institutions have operators setting odds and directly betting against each other. VanGrack stated that states can still play a role in consumer protection and anti-fraud, but placing the national derivatives market under a "hodgepodge of 50 different regulatory agencies" would damage market stability and investor confidence.