MORGANABLE BUSINESS / MARKET
Cryptocurrency exchanges are expanding into prediction markets as they seek income during a prolonged downturn in digital asset prices. The move could change how platforms attract customers beyond traditional cryptocurrency trading.
Akure —
Cryptocurrency exchanges are expanding into prediction markets as they seek income during a prolonged downturn in digital asset prices.
The move could change how platforms attract customers beyond traditional cryptocurrency trading.
The Financial Times reported on October 21 that Blockchain.com and Binance US are seeking United States regulatory approval to offer prediction markets. They join Coinbase, Crypto.com and Gemini, which have also entered the sector through products or partnerships.
The trend shows exchanges looking beyond traditional crypto trading.
Prediction markets let people trade contracts linked to future events, including elections, sports, economic announcements and central bank decisions.
Users trade based on what they think will happen, while prices shift as expectations change.
The interest comes as crypto prices and trading activity face pressure. Bitcoin and ether have fallen over the past year, while spot trading volumes weakened, according to the Financial Times.
Exchanges want products that keep customers active when crypto markets lose appeal.
EXCHANGES SEEK NEW REVENUE
Blockchain.com has applied to the US Commodity Futures Trading Commission for permission to offer regulated prediction markets and crypto derivatives to American customers.
The company announced its applications in October. If approved, it could bring event contracts and other products into its existing app.
The company says customers should manage digital assets, trade derivatives and take positions on real-world events without switching apps.
It already offers prediction markets through Polymarket in eligible international markets. US approval would let it serve American customers under the relevant rules.
Binance US has also applied for approval to offer prediction markets, according to a person familiar with the matter cited by the Financial Times.
Its move places it among crypto businesses seeking a foothold in the market. The application does not mean the service is approved or available to US customers.
Other companies are taking different routes. Coinbase has partnered with Kalshi, while Crypto.com has developed prediction market services.
Gemini has also entered the sector. These approaches let exchanges test demand, expand their products and compete for users interested in events as well as token prices.
For exchanges, the attraction is straightforward. More products can encourage customers to use an app and may create fee income. However, returns will depend on demand, contract design, costs and regulation.
PREDICTION MARKETS GAIN MOMENTUM
The sector’s growth has strengthened its appeal. The Financial Times reported that trading volumes on Polymarket and Kalshi rose from $17 billion in January to $72 billion in September, pointing to strong growth.
The figures contrast with weaker activity in conventional crypto markets. The same report said spot cryptocurrency trading volumes fell 18 per cent over the period.
Prediction markets are not a guaranteed replacement for crypto trading, but their growth gives exchanges a reason to explore them.
Polymarket and Kalshi are major names in the industry. Their platforms list contracts tied to different events.
Prices move when polls, public statements, economic data or other developments change the likelihood of an outcome.
These markets are not the same as owning shares or cryptocurrencies. A contract settles according to a defined event and its stated rules.
Traders can lose the money they commit if their prediction is wrong, so clear terms and reliable settlement matter.
REGULATORY QUESTIONS REMAIN
Regulation is a major challenge for companies entering the business. In the United States, federal and state authorities dispute whether some event contracts fall under commodities rules or state gambling laws. That disagreement has triggered legal challenges and uncertainty for operators.
The Financial Times reported that Coinbase had agreed to stop offering event contracts in Michigan after action by the state’s gaming regulator.
The case shows how state disputes can affect services even when companies argue federal oversight applies. Other legal challenges have added uncertainty.
Blockchain.com’s applications are being considered within the US federal regulatory system. The company needs approval before offering the proposed services to American customers.
Binance US must also meet applicable requirements. Until regulators decide, neither filing should be treated as permission to launch.
Rules differ outside the United States. In the United Kingdom, prediction markets are banned for retail investors because the products are treated as binary options.
Exchanges therefore cannot assume that a service permitted in one country can automatically launch elsewhere.
Companies must review local laws, customer protections and advertising rules before entering new markets.
They also need safeguards against fraud and manipulation. Oversight may raise costs, but it can build confidence.
WHAT THE EXPANSION MEANS
The move signals a broader shift in crypto. Exchanges increasingly want to become all-in-one trading destinations, offering digital assets, derivatives and contracts linked to real-world events.
This strategy may help them diversify income instead of relying on one source of trading fees.
The opportunity carries risks. Activity may slow if public interest fades, and legal disputes could restrict which contracts platforms list.
Companies must explain risks clearly, especially to inexperienced users who may mistake event contracts for simple bets with guaranteed returns.
Competition will intensify as more exchanges enter. Established platforms have users, market data and liquidity, while new entrants can use familiar apps and existing customer relationships. Partnerships may speed launches, but companies must earn trust.
Wider access could make event contracts easier to find alongside other financial products. Yet convenience should not obscure the risk of losses. Users need to understand the event, settlement conditions, fees and legal protections before trading.
Crypto exchanges are entering prediction markets to attract users and generate income during a difficult period for digital assets.
Rising trading volumes make the sector hard to ignore. Long-term success will depend on demand, clear regulation and responsible operations. Approval and profits are not guaranteed.
