Ripple CTO Clarifies Event Contracts Amid Coinbase legal Battle

TLDR

• Coinbase filed lawsuits in Illinois, Michigan, and Connecticut over event contracts.
• The exchange plans to launch event contract trading across the US in January 2026.
• Ripple CTO said event contracts qualify as derivatives based on the underlying event.
• Coinbase argues federal law governs event contracts, not state gambling rules.

Ripple’s Chief Technology Officer David Schwartz recently weighed in on Coinbase’s legal strategy as the cryptocurrency exchange filed lawsuits across several U.S. states. The lawsuits aim to prevent the application of state-level gambling laws to event contracts, which Coinbase plans to launch in early 2026. The debate comes at a time when the crypto sector faces increasing regulatory scrutiny over new financial instruments such as derivatives and prediction markets.

Coinbase Files Lawsuits to Support Event Contract Launch

Coinbase announced that it filed lawsuits in states including Illinois, Connecticut, and Michigan. These legal actions come in response to state laws that the company claims block access to event contract trading. Coinbase argues that event contracts function as federally regulated derivatives, not gambling instruments, and should not be subject to conflicting state laws.

The exchange plans to begin offering these contracts nationwide in January 2026. The service, launched in partnership with Kalshi, a U.S.-regulated prediction market operator, will enable users to trade outcomes of real-world events. Coinbase’s legal filing seeks clarity and protection from state-level prohibitions that could interfere with the launch.

Ripple CTO David Schwartz Clarifies Event Contract Definition

Ripple CTO David Schwartz addressed confusion surrounding the nature of event contracts in an online conversation. Responding to predictions that Coinbase might lose its legal case, Schwartz explained a common misconception. He emphasized the need to distinguish between the event itself and the financial contract built around it.

He noted that the classification of an event contract as a derivative depends on its underlying economic or commercial significance. Schwartz pointed out that these contracts typically involve predictions tied to elections, markets, weather, or other measurable events. He added that these features make them distinct from gambling activities, which lack the same regulatory structure and financial purpose.

Regulatory Implications and the Broader Crypto Landscape

Coinbase’s event contract rollout could expand the reach of regulated crypto-based derivatives in the U.S. However, differing interpretations of state and federal law continue to create uncertainty. The lawsuits aim to resolve potential legal barriers ahead of the January launch.

The dispute reflects broader challenges facing the crypto industry as companies introduce new products in jurisdictions with fragmented regulatory frameworks. Coinbase argues that federal oversight, particularly through entities like the CFTC, already governs these instruments, making additional state-level rules unnecessary.

In parallel, the Ripple ecosystem is preparing for its own development. The XRPL Lending Protocol is scheduled for validator voting in January 2026. This upgrade would enable on-chain institutional lending using XRP, with mechanisms designed to offer institutional-grade yields. If approved, the amendment would mark a significant evolution in decentralized finance tools on the XRP Ledger.

The post Ripple CTO Clarifies Event Contracts Amid Coinbase legal Battle appeared first on CoinCentral.