Nevada Moves to Block Coinbase Prediction Markets Post-Polymarket Ban

By: crypto insight|2026/02/05 05:00:02

Key Takeaways:

Nevada regulators have lodged a civil complaint against Coinbase to halt its prediction markets.
The state’s Gaming Control Board argues that these markets violate local gaming laws.
Coinbase contends that their operations are federally regulated and should be exempt from state gambling laws.
Previous actions against platforms like Kalshi and Polymarket indicate a trend in Nevada’s regulatory approach.

WEEX Crypto News, 2026-02-04 16:02:57

Nevada, known for its strict gaming laws, has recently upped the ante in its regulatory efforts towards cryptocurrency-based prediction markets. The state’s Gaming Control Board has set its sights on Coinbase, a major player in the crypto exchange space, thrusting it into the legal limelight. This drive to regulate prediction markets like those offered by Coinbase comes on the heels of a similar clampdown on platforms like Polymarket, showcasing an ongoing tension between state gaming and federal regulatory frameworks.

Understanding the Legal Battle

The Nevada Gaming Control Board’s decisive move against Coinbase is underpinned by an official civil enforcement complaint. Filed in Carson City, this legal action seeks not only a permanent injunction to cease Coinbase’s operations in the state but also requests declaratory relief and an immediate temporary restraining order. The board’s argument hinges on the claim that Coinbase offers event-based contracts—betting on outcomes of sports and elections—without possessing the requisite state licenses mandated under Nevada law.

Coinbase, leveraging a partnership with Kalshi, a designated contract market under the watch of the Commodity Futures Trading Commission (CFTC), introduced prediction markets to American users. While the federal oversight provided by CFTC should theoretically support their operations, Nevada officials have a contrasting view. They classify contracts tied to sporting and election outcomes as gambling, which squarely falls under the state’s jurisdiction, rather than as derivative products governed by federal laws.

Age Restrictions and Legal Compliance

Further complicating matters for Coinbase is the allegation that their platform allows individuals as young as 18 to trade event contracts, contravening Nevada’s legal gambling age of 21. This point has served to intensify the regulatory ire, as regulators assert that the continuation of such operations could inflict “serious, ongoing, irreparable harm” upon the state’s regulated gambling industry. This ongoing tug-of-war underscores the privileged position Coinbase holds in comparison to state-compliant sportsbooks, which are subjected to stringent compliance, taxation, and physical locality stipulations.

The exchange’s battle extends beyond Nevada’s borders, as Coinbase has engaged in legal disputes with several other states, such as Connecticut, Michigan, and Illinois. Their lawsuits against state gaming regulators underscore a fundamental disagreement: whether prediction markets fall under exclusive federal oversight or not. Coinbase maintains that state enforcement hinders innovation, a sentiment shared by many in the crypto ecosystem.

The Broader Implications for the Crypto Industry

Mike Dreitzer, Chairman of the Nevada Gaming Control Board, has emphasized the necessity of enforcement actions. Amid emerging digital betting-style innovations, Nevada remains steadfast in its dedication to protecting consumers and upholding the state’s gaming integrity. This determined stance indicates the potential for more robust applications of state laws to novel crypto products, affecting not just Coinbase but the broader landscape of prediction markets.

Kalshi, another major player embroiled in Nevada’s regulatory scrutiny, finds itself in a similar predicament. Previous enforcement efforts against Kalshi over its sports-related contracts foreshadow the board’s willingness to tackle any perceived violations head-on. Although Kalshi continues to fight its legal battle on appeal, the outcome holds significant implications for market operators seeking clarity and consistency between federal and state laws.

Kalshi’s strategic expansion, marked by opening a new office in Washington, D.C., and hiring John Bivona, a seasoned political strategist, underscores their proactive approach to shaping policy under increasing scrutiny. This ongoing dialogue at the legislative level hints at a possible recalibration of regulatory frameworks, potentially paving the way for clearer guidelines that reconcile federal oversight with state gaming laws.

Political Dynamics and Crypto Regulation

While regulatory actions tighten around prediction markets, a parallel political discourse emerges. A proposed legislative measure aims to curtail the interaction between government officials and prediction markets, backed by notable figures including over 30 US House Democrats and former Speaker Nancy Pelosi. This proposal illustrates the intricate web of considerations policy makers must untangle.

At the heart of these considerations lies a contentious Polymarket bet. The wager began with a mere $32,000 stake and ballooned to over $400,000, climaxing with the unexpected detention of Nicolás Maduro, the Venezuelan President. Such volatile incidents drive lawmakers to reassess the influence and potential pitfalls of prediction markets, influencing policy decisions that will sculpt the industry’s future trajectory.

Navigating Legal and Market Challenges

In reflecting upon the broader implications of Nevada’s crackdown on Coinbase and similar platforms, one perceives a landscape fraught with complexity. The interplay between federal mandates and state laws presents significant challenges not only for the exchanges under scrutiny but also for the policymakers striving to craft a cohesive regulatory environment. As digital betting continues to evolve, exchanges like Coinbase and Kalshi will need to navigate an intricate legal framework that balances consumer protection with market innovation.

Impacts on the Crypto Ecosystem

The controversies engulfing prediction markets are emblematic of a larger tension within the blockchain and cryptocurrency sectors, where novel financial instruments blur traditional regulatory boundaries. As the digital economy grows, states like Nevada have positioned themselves at the forefront of shaping the rules that govern these emerging markets. Their actions not only affect the exchanges directly involved but also resonate throughout the entire crypto ecosystem.

For the burgeoning community of crypto investors and enthusiasts, the stakes in this legal chess game are immense. Should Nevada’s regulatory stance gain traction, it could redefine the way prediction markets operate in the United States, imposing new compliance burdens on operators. This could stifle innovation or push companies to devise workaround strategies that remain compliant while preserving the essence of decentralized finance.

Future Directions for Regulation and Innovation

As the crypto industry continues its rapid expansion, legal precedents arising from ongoing disputes will undoubtedly shape its future contours. Policymakers are tasked with the formidable challenge of crafting regulations that do not inadvertently stifle the potential of blockchain technologies while still ensuring robust investor protections. The case of Nevada versus Coinbase is a critical flashpoint in this evolving narrative.

The coming years will be pivotal in determining whether harmonized federal and state regulations can emerge to provide clarity and direction for operators. As companies navigate this uncertain terrain, they must balance aggressive growth strategies with compliance, acknowledging the delicate balance that underpins the industry’s progress.

In conclusion, Nevada’s assertive approach toward prediction markets is emblematic of broader regulatory challenges facing the crypto industry. As new financial technologies continue to evolve, legal frameworks must adapt, fostering environments where innovation can thrive alongside comprehensive consumer protections. The outcome of these regulatory battles will have far-reaching implications for the future of prediction markets and, more broadly, the role of crypto in the global financial system.

FAQ

What is the main issue between Nevada and Coinbase regarding prediction markets?

Nevada regulators have filed a legal complaint against Coinbase, arguing that the company’s prediction markets violate state gaming laws as they effectively constitute unlicensed gambling activities. Coinbase contends their offerings fall under federal jurisdiction regulated by the CFTC.

How does the age requirement conflict play into the dispute with Coinbase?

Coinbase is accused of permitting individuals aged 18 and older to participate in prediction markets, which conflicts with Nevada’s legal gambling age of 21, thereby adding to the regulatory challenges they face in the state.

What are prediction markets and why are they controversial?

Prediction markets allow individuals to trade contracts that pay based on the outcome of future events, such as sports or elections. They are controversial because they sit at the intersection of gambling and financial trading, often leading to regulatory scrutiny over their legality and ethical implications.

How might Nevada’s actions impact other crypto prediction market platforms?

If Nevada’s regulatory actions succeed and set a precedent, other states may follow suit, potentially creating a more stringent regulatory environment for prediction markets. This could lead to increased compliance costs and affect the operational feasibility of such platforms across the U.S.

What legislative actions are being proposed in response to prediction markets?

Proposed legislation aiming to limit the interaction between government officials and prediction markets is gaining support in Congress. This reflects a broader concern about the influence and transparency of these markets and seeks to impose clearer boundaries to protect market integrity.

In essence, the developments in Nevada spotlight the ongoing tension between innovation and regulation, a dynamic that will be central to shaping the future of crypto-based financial services.

Foreword: Today, the People's Bank of China's website published the "Notice of the People's Bank of China, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration for Market Regulation, China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, State Administration of Foreign Exchange on Further Preventing and Dealing with Risks Related to Virtual Currency and Others (Yinfa [2026] No. 42)", the latest regulatory requirements from the eight departments including the central bank, which are basically consistent with the regulatory requirements of recent years. The main focus of the regulation is on speculative activities such as virtual currency trading, exchanges, ICOs, overseas platform services, and this time, regulatory oversight of RWA has been added, explicitly prohibiting RWA tokenization, stablecoins (especially those pegged to the RMB). The following is the full text:

To the people's governments of all provinces, autonomous regions, and municipalities directly under the Central Government, the Xinjiang Production and Construction Corps:

Recently, there have been speculative activities related to virtual currency and Real-World Assets (RWA) tokenization, disrupting the economic and financial order and jeopardizing the property security of the people. In order to further prevent and address the risks related to virtual currency and Real-World Assets tokenization, effectively safeguard national security and social stability, in accordance with the "Law of the People's Republic of China on the People's Bank of China," "Law of the People's Republic of China on Commercial Banks," "Securities Law of the People's Republic of China," "Law of the People's Republic of China on Securities Investment Funds," "Law of the People's Republic of China on Futures and Derivatives," "Cybersecurity Law of the People's Republic of China," "Regulations of the People's Republic of China on the Administration of Renminbi," "Regulations on Prevention and Disposal of Illegal Fundraising," "Regulations of the People's Republic of China on Foreign Exchange Administration," "Telecommunications Regulations of the People's Republic of China," and other provisions, after reaching consensus with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, and with the approval of the State Council, the relevant matters are notified as follows:

I. Clarify the essential attributes of virtual currency, Real-World Assets tokenization, and related business activities

(I) Virtual currency does not possess the legal status equivalent to fiat currency. Virtual currencies such as Bitcoin, Ether, Tether, etc., have the main characteristics of being issued by non-monetary authorities, using encryption technology and distributed ledger or similar technology, existing in digital form, etc. They do not have legal tender status, should not and cannot be circulated and used as currency in the market.

The business activities related to virtual currency are classified as illegal financial activities. The exchange of fiat currency and virtual currency within the territory, exchange of virtual currencies, acting as a central counterparty in buying and selling virtual currencies, providing information intermediary and pricing services for virtual currency transactions, token issuance financing, and trading of virtual currency-related financial products, etc., fall under illegal financial activities, such as suspected illegal issuance of token vouchers, unauthorized public issuance of securities, illegal operation of securities and futures business, illegal fundraising, etc., are strictly prohibited across the board and resolutely banned in accordance with the law. Overseas entities and individuals are not allowed to provide virtual currency-related services to domestic entities in any form.

A stablecoin pegged to a fiat currency indirectly fulfills some functions of the fiat currency in circulation. Without the consent of relevant authorities in accordance with the law and regulations, any domestic or foreign entity or individual is not allowed to issue a RMB-pegged stablecoin overseas.

（II）Tokenization of Real-World Assets refers to the use of encryption technology and distributed ledger or similar technologies to transform ownership rights, income rights, etc., of assets into tokens (tokens) or other interests or bond certificates with token (token) characteristics, and carry out issuance and trading activities.

Engaging in the tokenization of real-world assets domestically, as well as providing related intermediary, information technology services, etc., which are suspected of illegal issuance of token vouchers, unauthorized public offering of securities, illegal operation of securities and futures business, illegal fundraising, and other illegal financial activities, shall be prohibited; except for relevant business activities carried out with the approval of the competent authorities in accordance with the law and regulations and relying on specific financial infrastructures. Overseas entities and individuals are not allowed to illegally provide services related to the tokenization of real-world assets to domestic entities in any form.

II. Sound Work Mechanism

(III) Inter-agency Coordination. The People's Bank of China, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of virtual currency-related illegal financial activities.

The China Securities Regulatory Commission, together with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the State Administration of Foreign Exchange, and other departments, will improve the work mechanism, strengthen coordination with the Cyberspace Administration of China, the Supreme People's Court, and the Supreme People's Procuratorate, coordinate efforts, and overall guide regions to carry out risk prevention and disposal of illegal financial activities related to the tokenization of real-world assets.

(IV) Strengthening Local Implementation. The people's governments at the provincial level are overall responsible for the prevention and disposal of risks related to virtual currencies and the tokenization of real-world assets in their respective administrative regions. The specific leading department is the local financial regulatory department, with participation from branches and dispatched institutions of the State Council's financial regulatory department, telecommunications regulators, public security, market supervision, and other departments, in coordination with cyberspace departments, courts, and procuratorates, to improve the normalization of the work mechanism, effectively connect with the relevant work mechanisms of central departments, form a cooperative and coordinated working pattern between central and local governments, effectively prevent and properly handle risks related to virtual currencies and the tokenization of real-world assets, and maintain economic and financial order and social stability.

III. Strengthened Risk Monitoring, Prevention, and Disposal

(5) Enhanced Risk Monitoring. The People's Bank of China, China Securities Regulatory Commission, National Development and Reform Commission, Ministry of Industry and Information Technology, Ministry of Public Security, State Administration of Foreign Exchange, Cyberspace Administration of China, and other departments continue to improve monitoring techniques and system support, enhance cross-departmental data analysis and sharing, establish sound information sharing and cross-validation mechanisms, promptly grasp the risk situation of activities related to virtual currency and real-world asset tokenization. Local governments at all levels give full play to the role of local monitoring and early warning mechanisms. Local financial regulatory authorities, together with branches and agencies of the State Council's financial regulatory authorities, as well as departments of cyberspace and public security, ensure effective connection between online monitoring, offline investigation, and fund tracking, efficiently and accurately identify activities related to virtual currency and real-world asset tokenization, promptly share risk information, improve early warning information dissemination, verification, and rapid response mechanisms.

(6) Strengthened Oversight of Financial Institutions, Intermediaries, and Technology Service Providers. Financial institutions (including non-bank payment institutions) are prohibited from providing account opening, fund transfer, and clearing services for virtual currency-related business activities, issuing and selling financial products related to virtual currency, including virtual currency and related financial products in the scope of collateral, conducting insurance business related to virtual currency, or including virtual currency in the scope of insurance liability. Financial institutions (including non-bank payment institutions) are prohibited from providing custody, clearing, and settlement services for unauthorized real-world asset tokenization-related business and related financial products. Relevant intermediary institutions and information technology service providers are prohibited from providing intermediary, technical, or other services for unauthorized real-world asset tokenization-related businesses and related financial products.

(7) Enhanced Management of Internet Information Content and Access. Internet enterprises are prohibited from providing online business venues, commercial displays, marketing, advertising, or paid traffic diversion services for virtual currency and real-world asset tokenization-related business activities. Upon discovering clues of illegal activities, they should promptly report to relevant departments and provide technical support and assistance for related investigations and inquiries. Based on the clues transferred by the financial regulatory authorities, the cyberspace administration, telecommunications authorities, and public security departments should promptly close and deal with websites, mobile applications (including mini-programs), and public accounts engaged in virtual currency and real-world asset tokenization-related business activities in accordance with the law.

(8) Strengthened Entity Registration and Advertisement Management. Market supervision departments strengthen entity registration and management, and enterprise and individual business registrations must not contain terms such as "virtual currency," "virtual asset," "cryptocurrency," "crypto asset," "stablecoin," "real-world asset tokenization," or "RWA" in their names or business scopes. Market supervision departments, together with financial regulatory authorities, legally enhance the supervision of advertisements related to virtual currency and real-world asset tokenization, promptly investigating and handling relevant illegal advertisements.

（IX） Continued Rectification of Virtual Currency Mining Activities. The National Development and Reform Commission, together with relevant departments, strictly controls virtual currency mining activities, continuously promotes the rectification of virtual currency mining activities. The people's governments of various provinces take overall responsibility for the rectification of "mining" within their respective administrative regions. In accordance with the requirements of the National Development and Reform Commission and other departments in the "Notice on the Rectification of Virtual Currency Mining Activities" (NDRC Energy-saving Building [2021] No. 1283) and the provisions of the "Guidance Catalog for Industrial Structure Adjustment (2024 Edition)," a comprehensive review, investigation, and closure of existing virtual currency mining projects are conducted, new mining projects are strictly prohibited, and mining machine production enterprises are strictly prohibited from providing mining machine sales and other services within the country.

（X） Severe Crackdown on Related Illegal Financial Activities. Upon discovering clues to illegal financial activities related to virtual currency and the tokenization of real-world assets, local financial regulatory authorities, branches of the State Council's financial regulatory authorities, and other relevant departments promptly investigate, determine, and properly handle the issues in accordance with the law, and seriously hold the relevant entities and individuals legally responsible. Those suspected of crimes are transferred to the judicial authorities for processing according to the law.

（XI） Severe Crackdown on Related Illegal and Criminal Activities. The Ministry of Public Security, the People's Bank of China, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, as well as judicial and procuratorial organs, in accordance with their respective responsibilities, rigorously crack down on illegal and criminal activities related to virtual currency, the tokenization of real-world assets, such as fraud, money laundering, illegal business operations, pyramid schemes, illegal fundraising, and other illegal and criminal activities carried out under the guise of virtual currency, the tokenization of real-world assets, etc.

（XII） Strengthen Industry Self-discipline. Relevant industry associations should enhance membership management and policy advocacy, based on their own responsibilities, advocate and urge member units to resist illegal financial activities related to virtual currency and the tokenization of real-world assets. Member units that violate regulatory policies and industry self-discipline rules are to be disciplined in accordance with relevant self-regulatory management regulations. By leveraging various industry infrastructure, conduct risk monitoring related to virtual currency, the tokenization of real-world assets, and promptly transfer issue clues to relevant departments.

IV. Strict Supervision of Domestic Entities Engaging in Overseas Business Activities

（XIII） Without the approval of relevant departments in accordance with the law and regulations, domestic entities and foreign entities controlled by them may not issue virtual currency overseas.

（XIV） Domestic entities engaging directly or indirectly in overseas external debt-based tokenization of real-world assets, or conducting asset securitization activities abroad based on domestic ownership rights, income rights, etc. (hereinafter referred to as domestic equity), should be strictly regulated in accordance with the principles of "same business, same risk, same rules." The National Development and Reform Commission, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and other relevant departments regulate it according to their respective responsibilities. For other forms of overseas real-world asset tokenization activities based on domestic equity by domestic entities, the China Securities Regulatory Commission, together with relevant departments, supervise according to their division of responsibilities. Without the consent and filing of relevant departments, no unit or individual may engage in the above-mentioned business.

(15) Overseas subsidiaries and branches of domestic financial institutions providing Real World Asset Tokenization-related services overseas shall do so legally and prudently. They shall have professional personnel and systems in place to effectively mitigate business risks, strictly implement customer onboarding, suitability management, anti-money laundering requirements, and incorporate them into the domestic financial institutions' compliance and risk management system. Intermediaries and information technology service providers offering Real World Asset Tokenization services abroad based on domestic equity or conducting Real World Asset Tokenization business in the form of overseas debt for domestic entities directly or indirectly venturing abroad must strictly comply with relevant laws and regulations. They should establish and improve relevant compliance and internal control systems in accordance with relevant normative requirements, strengthen business and risk control, and report the business developments to the relevant regulatory authorities for approval or filing.

V. Strengthen Organizational Implementation

(16) Strengthen organizational leadership and overall coordination. All departments and regions should attach great importance to the prevention of risks related to virtual currencies and Real World Asset Tokenization, strengthen organizational leadership, clarify work responsibilities, form a long-term effective working mechanism with centralized coordination, local implementation, and shared responsibilities, maintain high pressure, dynamically monitor risks, effectively prevent and mitigate risks in an orderly and efficient manner, legally protect the property security of the people, and make every effort to maintain economic and financial order and social stability.

(17) Widely carry out publicity and education. All departments, regions, and industry associations should make full use of various media and other communication channels to disseminate information through legal and policy interpretation, analysis of typical cases, and education on investment risks, etc. They should promote the illegality and harm of virtual currencies and Real World Asset Tokenization-related businesses and their manifestations, fully alert to potential risks and hidden dangers, and enhance public awareness and identification capabilities for risk prevention.

VI. Legal Responsibility

(18) Engaging in illegal financial activities related to virtual currencies and Real World Asset Tokenization in violation of this notice, as well as providing services for virtual currencies and Real World Asset Tokenization-related businesses, shall be punished in accordance with relevant regulations. If it constitutes a crime, criminal liability shall be pursued according to the law. For domestic entities and individuals who knowingly or should have known that overseas entities illegally provided virtual currency or Real World Asset Tokenization-related services to domestic entities and still assisted them, relevant responsibilities shall be pursued according to the law. If it constitutes a crime, criminal liability shall be pursued according to the law.

(19) If any unit or individual invests in virtual currencies, Real World Asset Tokens, and related financial products against public order and good customs, the relevant civil legal actions shall be invalid, and any resulting losses shall be borne by them. If there are suspicions of disrupting financial order and jeopardizing financial security, the relevant departments shall deal with them according to the law.

This notice shall enter into force upon the date of its issuance. The People's Bank of China and ten other departments' "Notice on Further Preventing and Dealing with the Risks of Virtual Currency Trading Speculation" (Yinfa [2021] No. 237) is hereby repealed.

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