During a recent discussion on the social media platform X, Ripple’s Chief Technology Officer, David Schwartz, weighed in on the implications of Coinbase’s newly launched prediction markets. This dialogue comes on the heels of Coinbase revealing that it has filed lawsuits in several key U.S. states, including Connecticut, Michigan, and Illinois, to safeguard its forthcoming trading platform.
On Friday, Coinbase announced its collaboration with Kalshi, a U.S.-based operator of prediction markets, intending to introduce event contracts on its platform. In a systems update issued on December 17, the exchange clarified its plan to enable customers to trade these event contracts starting in January 2026. The legal actions arise from concerns that states like Illinois possess laws potentially hindering Coinbase clients from accessing these contracts. The platform defines event contracts as “a type of derivative instrument extensively regulated by federal law that can be traded only on federally registered exchanges in transactions facilitated by federally registered intermediaries.”
In an effort to clarify the nature of event contracts, Coinbase’s decision to litigate aims to prevent the misapplication of gambling laws to these financial instruments. An online user speculated that Coinbase may face challenges winning its lawsuits, prompting further inquiry into the fundamental definition of what constitutes an event contract.
In response to the speculation, Schwartz emphasized a critical distinction, stating, “You’re confusing the contract with the event underlying the contract.” He elaborated by explaining that “Whether the contract is a derivative depends on the nature of the event underlying it.” Schwartz noted that event contracts are categorized as derivative instruments, enabling parties to make predictions about the occurrence of future events encompassing various sectors including economics, elections, climate conditions, sports, and other areas of potential commercial significance.
In related developments, the XRPL Lending Protocol is set to launch, allowing on-ledger lending for institutions and providing XRP holders an opportunity to earn institutional-grade yields. Amendments related to this initiative are anticipated to enter validator voting by late January 2026, marking a significant stride toward the establishment of protocol-native credit markets on the XRP Ledger.
