Coinbase Legal Director Criticizes State Regulators for Misleading Predictions on Market Oversight Issues

SmartContractAuditor · 2026-02-27T23:04:06+00:00

Coinbase Vice President of Legal Affairs pointed out that some state governments' restrictions on prediction markets mislead the public and misinterpret federal law, attempting to expand state-level regulatory authority. Coinbase has filed lawsuits in multiple states, accusing these state bans of threatening users, and emphasizing that prediction markets should be regulated at the federal level rather than by state interference.

SmartContractAuditor

2026-02-27 23:04:06

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Odaily Planet Daily reports that Ryan VanGrack, Coinbase’s Vice President of Legal and Head of Global Litigation, stated that some U.S. state governments are “misleading the public” when restricting prediction market activities, misinterpreting federal law and attempting to expand state-level regulatory authority.

After Coinbase recently partnered with prediction market platform Kalshi to launch related products, lawsuits have been filed in Connecticut, Illinois, Michigan, and Nevada. Regulatory agencies in these states previously issued cease and desist orders or warnings, claiming that sports-related contracts constitute illegal gambling. VanGrack said these actions pose a “real and urgent 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 derivatives markets, including event contracts, which should fall under federal regulation. He believes that attempts by states to exclude sports event contracts from the definition of derivatives lack legal basis.

Regarding claims by some state governments that lack of state intervention would lead to unregulated markets, VanGrack denied this and emphasized that the CFTC has long regulated derivatives markets worth trillions of dollars and has issued enforcement warnings regarding insider trading in event contracts.

Coinbase also noted that prediction markets in the form of exchanges are fundamentally different from traditional sports betting. In CFTC-regulated exchanges like Kalshi, prices are determined by market participants, whereas traditional betting companies set odds and directly take bets.

VanGrack stated that states can still play a role in consumer protection and anti-fraud efforts, but placing the nationwide derivatives market under a “patchwork system of 50 different regulators” would harm market stability and investor confidence.

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