The regulators of Nevada have taken a new action against the crypto exchange Coinbase. The action is taken to put a stop to the prediction market offerings of the company in the state as tensions surge between federal derivatives oversight and state gambling laws.
On February 2, the Nevada Gaming Control Board filed a civil enforcement complaint against Coinbase Financial Markets in Carson City. The complaint included a request for a permanent ruling, declaratory relief, and an emergency temporary prohibiting order.
The regulators claim that the platform is providing event-based contracts associated with sports and elections without the state gaming licence needed under Nevada law.
Coinbase rolled out prediction market trading to American users in January, along with the collaboration with Kalshi, a federally regulated contract market looked after by the Commodity Futures Trading Commission.
The executives of Nevada, though, mention contracts associated with sporting outcomes and elections constitute betting activity and thus fall under state gaming rules instead of federal derivatives jurisdiction. The board also claims the Coinbase app allows users aged 18 and older to trade event contracts, below the legal gambling age of Nevada, which is 21.
The Ongoing Clash
The court filings mention that the prolonged operation of the firm makes serious, ongoing, irreparable harm and provides Coinbase an unfair advantage over licensed sportsbooks that should adhere to strict compliance, tax, and physical-location needs.
The dispute has come at a time when there is already an ongoing clash between Coinbase and various US states. Not long ago, Coinbase filed federal lawsuits against gaming regulators in Connecticut, Michigan and Illinois, claiming that prediction markets come solely under CFTC authority and that state enforcement efforts unlawfully limit revolution.
Those states had released cease-and-desist notices claiming the prediction platform of unlicensed sports wagering. The executives of Nevada maintain their authority is to safeguard consumers and maintain the integrity of the gaming industry of the state.
The chairman of the Board, Mike Dreitzer, revealed enforcement action was required to uphold those commitments as new virtual betting-style products set foot into the market.
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