Coinbase is making its biggest move yet into the broader financial industry. On Wednesday, the company announced that its customers will now be able to trade stocks on its platform and also bet on a wide range of events through a partnership with prediction market startup Kalshi. The moves indicate Coinbase is moving beyond its long-standing roots as a cryptocurrency company and are likely to intensify its rivalry with fintech companies like Robinhood.
The stock market and forecast announcements came at an event in San Francisco called System Upgrade, which included onstage presentations from Coinbase CEO Brian Armstrong and other executives, who also announced new trading features and a platform called Coinbase Business aimed at startups and small businesses. The event comes as the company seeks to present itself as an “everything exchange.”
Notably, the company has not announced a release date for its own cryptocurrency token, something executives have teased in recent months but without providing additional details beyond saying they want to ensure any token launch happens fairly.
The new stock trading feature is by far the most important announcement because it will serve as a crucial test of whether Coinbase can leverage its dominant crypto brand to expand into other sectors. This will also allow it to compete more directly with Robinhood, which made its name as a stock trading app but has since made significant inroads into the crypto space.
Coinbase will initially only offer a curated list of top stocks and ETFs, but says it will expand to thousands of other stocks in the coming months. The company says stock trading will be available 24 hours a day, five days a week, and there will be no fees to trade. Early next year, Coinbase plans to roll out perpetual stock futures, a type of derivative pioneered by the crypto industry that allows traders to hold options that don’t expire. The perpetual term offering will only be available outside the United States.
Coinbase’s new stock offerings come at a time when the financial market is beginning to embrace tokenization. The term describes the transformation of a variety of assets into tokens that can be traded on a blockchain, a process that results in near-instant settlement and allows traders to more efficiently deploy collateral. Currently, companies like BlackRock offer tokenized versions of Treasuries and money market funds. Tokenized stock offerings are still in an early stage but are expected to gain traction quickly, which could play to Coinbase’s strengths given the company’s long-standing crypto expertise.
For its prediction markets offering, Coinbase will source order flow from Kalshi, which is the same model used by Robinhood. Concretely, this involves serving as a distribution platform for the startup, which has experienced exponential growth this year by offering a new form of betting inviting users to bet against each other on the outcome of events ranging from elections to interest rate cuts to sports matches. The partnership with Kalshi will likely result in a revenue split from small commissions earned by the platform on betting.
The Stock and Prediction Markets have the potential to provide Coinbase with significant new revenue streams and further the company’s long-standing goal of diversifying its business beyond cryptocurrency trading. Coinbase’s stock has been roughly flat since the start of the year, after giving up big gains in recent months as crypto markets slumped and the price of Bitcoin fell about 30% from its October highs.
Coinbase also took advantage of the San Francisco event to announce that its Base application is now available in 140 countries. The app, which debuted this summer, aims to allow everyday people to launch financial and creative products on the company’s blockchain and earn a share of the revenue they generate.
Other services unveiled by Coinbase on Wednesday included expanded access to the Solana blockchain through a decentralized exchange and an AI-powered wealth management tool called Coinbase Advisor.
