DeFi: Coinbase Bets on Equity Tokens & Prediction Markets to fight Robinhood
From Trading Crypto to Trading Everything
GM Fintech Futurists,
It’s almost the end of the year, and we are thankful for the coming break. Our team will publish a few more editions and retrospectives around 2025, and then take a well-deserved pause. You should too — it’s time to recharge, we need your creative energy in 2026.
Today we highlight the following:
DIGITAL ASSETS: From Trading Crypto to Trading Everything
ANALYSIS: Stripe’s Tempo is building the Apple of payment blockchains
CURATED UPDATES: Financial Institutions and Adoption; DeFi and Digital Assets; Blockchain Protocols; NFTs, DAOs and the Metaverse
To support this writing and access our full archive of newsletters, analyses, and guides to building in Fintech & DeFi, subscribe below (if you haven’t yet).
Our Ecosystem: AI Venture Fund | AI Research | Lex Linkedin & Twitter | Sponsors
DIGITAL ASSETS: From Trading Crypto to Trading Everything
Adoption of tokenized markets continues.
This week, Coinbase will unveil both (1) prediction markets and (2) tokenised equities. According to reports, both offerings are being developed in-house. Coinbase follows Robinhood in the trend.
Prediction markets are where participants buy and sell contracts tied to the outcome of future events, such as elections and macroeconomic events, with prices that reflect collective market expectations of those events occurring. The core idea is that markets will aggregate information better than experts or polls. And, unfortunately, people like betting. Out of the companies vying for prediction market success, the two dominant platforms in 2025 are Polymarket and Kalshi.
Polymarket, launched in 2020, has over $21B in cumulative volume, with 33,320 markets created in September alone. Kalshi, founded in 2018, is live in 140 countries and its $2.86B in monthly volumes in September doubled that of Polymarket during the same period.
Recently, Kalshi was valued at $10B and Polymarket is seeking investment at $12-15B. Volumes in the space have rocketed from under $1B in 2020, to tens of billions since 2024. With only two parties competing meaningfully and clear consumer demand, Coinbase is joining the fray.
We have covered both here in detail:
Tokenized equities are a more structurally significant move.
By offering tokenised representations of stocks, Coinbase is effectively collapsing the distinction between crypto assets and traditional securities within its exchange. The promise is familiar: fractional ownership, faster settlement, and extended trading hours. And the strategic intent is also clear: make tokenised financial assets feel as native to a crypto exchange as digital assets.
Coinbase is positioning itself as an all-in-one financial application spanning payments (Coinbase One and Base), low-risk yield (staking), and investments across crypto and tokenised equities, alongside prediction markets, derivatives and active trading products.
But Coinbase is not alone.
Kraken this month acquired Backed Finance, the company driving the issuance of Kraken’s tokenised stocks (xStocks), and in October acquired Small Exchange for $100M.
The Small Exchange acquisition provides Kraken with the necessary licensing to launch a fully US-native derivatives product suite under CFTC oversight. Overall, Kraken’s strategy looks to control the entire lifecycle of assets, from issuance to trading and settlement. Obtaining US regulatory licenses allows it to offer a wide range of products, including tokenised stocks and derivatives, ahead of a potential 2026 IPO.
Meanwhile, Robinhood launched tokenised versions of over 200 U.S. stocks and ETFs for its European customers on Arbitrum. The fintech plans to migrate the stocks to its own L2, also built on Arbitrum’s tech stack, in the future.
All are following a similar playbook — vertically integrating issuance, trading, and custody within their own crypto stack, using their own L2 as core infrastructure. The main difference is in the distribution channels.
Regulatory uncertainty remains a constraint, particularly around securities law and jurisdictional coverage, but momentum is clearly building. Coinbase’s launch matters less as a standalone product release and more as confirmation that tokenised equities are becoming a competitive dimension for brokers. As with options and margin trading before them, tokenised stocks could become a normalised offering.
There are, of course, complications. What is the underlying collateral for the financial instruments? Sometimes, it is just a derivative and synthetically creates exposure, like a contract for difference. Sometimes, it is actually backed by a fund or equity held in custody, maintained to back the tokenized version of the same. Traders are less likely to have the same types of rights they do over the tokenized equivalent than over the traditional version.
There will also be issues of liquidity and price disconnect as the largest liquidity pools are going to be traditional, and the tokenized stocks will have a ton of slippage and arbitrage potential. You may see $100 as a price on Nasdaq and $110 as a price on a small Coinbase/Robinhood version of the same market. But this is a problem that quant firms and market makers are built to solve.
However, the benefit is that brokers — Coinbase, Robinhood, Kraken — can sidestep traditional stock exchange infrastructure entirely, and leverage their blockchain market venues on the back of multi-billion dollar open source financial infrastructure.
👑Related Coverage👑
Analysis: Stripe’s Tempo is building the Apple of payment blockchains
We discuss how Stripe’s Tempo chain launches as a vertically integrated, payments-first blockchain designed to industrialize stablecoin transfers and embed fintech primitives directly into the protocol.
We analyze Tempo alongside competing architectures—from Bitcoin-driven payment rails like Lightspark to new L1s such as Monad and MegaETH—and show how most computation-layer innovation will still accrue back to Ethereum as ZK roll-ups, parallelization, and appchains consolidate around credibly neutral settlement. Ultimately, we argue that Tempo’s $500MM seed round reflects the new mega-tech playbook: own the customer, own the distribution, own the vertical, and let open-source subsidize the innovation.
Curated Updates
Here are the rest of the updates hitting our radar.
Financial Institutions and Adoption
⭐ JPMorgan Steps Further Into Crypto With Tokenized Money Fund - WSJ
UK Treasury Plans to Bring Crypto Firms Under Full FCA Oversight - Decrypt
Pantera, Coinbase pile on as crypto startups raise $176 million this week - DLNews
Singapore leads world in crypto adoption: Bybit report - Bybit
DeFi and Digital Assets
JPMorgan to shepherd HashKey listing as crypto firm eyes $215m raise - DLNews
PayPal stablecoin nears $4bn as DeFi protocols drive adoption - DLNews
CME Group Expands Crypto Derivatives With Spot-Quoted XRP and Solana Futures - CoinDesk
Blockchain Protocols
⭐ Ethereum Activates Fusaka Upgrade - CoinDesk
Stripe-backed Tempo blockchain inches toward launch with public testnet - DLNews
NFTs, DAOs and the Metaverse
Colle AI Expands AI-Driven Design Automation for Scalable Multichain NFT Creation - WSAV
NFT Project Pudgy Penguins Takes Over Las Vegas Sphere in Holiday Campaign - CoinDesk
🚀 Level Up
Join our Premium community and receive all the Fintech and Web3 intelligence you need to level up your career. Get access to Long Takes, archives, and special reports.
Sponsor the Fintech Blueprint and reach over 200,000 professionals.
👉 Reach out here.Check out our AI newsletter, the Future Blueprint, 👉 here.
Read our Disclaimer here — this newsletter does not provide investment advice