Is Coinbase Underwriting Crypto’s Slide Into a Casino?
Coinbase’s guardrails are built to keep out scammers, but they do nothing to change the math of the casino.
Coinbase says it is building the Everything Exchange. This goal, in its own words is to put “every type of asset and market under one roof” and to say “no to financial fragmentation.” In December 2025 and again this spring, the company published two “System Update” posts laying out this vision: stock trading, prediction markets, perpetual futures, primary token sales, and a new Launches tab giving users access to “any of the tens of millions of Base or Solana tokens the instant they become available onchain.” [1][2]
The announcements generated plenty of product coverage. What they have generated less of is a serious question: does building a cleaner, regulated, more accessible casino make the casino safer — or just more socially acceptable?
The Harm-Reduction Story
Coinbase’s implicit defense has a recognizable shape. It concedes that crypto has a problem in the volume of scams, rug pulls, theft seen in the industry. It then demonstrates, persuasively, that it reduces that problem. KYC ends anonymity. Custody lets funds be frozen. Curated token sales require vetted teams and lockup periods. All of this is true.
But notice the move. The defense quietly redefined “harm” to mean “fraud,” proved Coinbase reduces fraud, and treated that as proof it reduces harm. Those are not the same claim.
You can see the substitution in the guardrails themselves. Take Coinbase’s “Experimental” label, introduced to flag newly listed or thin-volume assets. The fine print is unambiguous: the label “won’t impact customers’ ability to send, receive, buy, sell and/or hold assets on Coinbase.” [3] It is a sticker, not a gate. It informs; it does not protect. And informing was never the main problem. The central harm in speculative crypto is not that people are deceived about these products. It is that the products lose money for the typical person who buys them, including the honest, fully disclosed, vetted, KYC’d, customers. This is not because anyone stole anything. Because that is what the product does.
Negative Expected Value Is The Harm That Should Be Mitigated
When critics call speculative crypto products negative-expected-value, the numbers make clear this is a description, not an opinion.
Solidus Labs analyzed over 7 million tokens launched on Pump.fun between January 2024 and March 2025. Their 2025 Rug Pull Report found 98.6% exhibited characteristics of rug pulls or pump-and-dump schemes; fewer than 100,000 maintained even $1,000 in liquidity. [4] On Raydium, 93% of the 361,000+ liquidity pools examined showed “soft rug pull” behavior, with median losses of $2,832 per incident. [4] Galaxy Research, surveying the same terrain in October 2025, concluded directly: “The vast majority of market participants ultimately lose money trading meme coins, and in many respects, it’s just plain gambling,” noting median hold times around 100 seconds on Solana memecoins, down from roughly 300 seconds a year earlier. [5] Platforms, launchpads, and bots capture the structural profits; retail traders absorb the structural losses. [5]
We are not ready to let crypto derivatives trading be a non-US phenomenon. — Max Branzburg
The leverage story sits on top of that structure rather than replacing it. Coinbase’s U.S. CFTC-regulated crypto perpetuals offer up to 10x intraday leverage on contracts such as BTC-PERP and ETH-PERP, while metals futures like gold and silver offer up to 20x leverage. [6] Offshore venues, by contrast, routinely advertise 50x or 100x leverage on similar instruments, and the Reuters coverage of the May 29, 2026 CFTC action notes that perpetual futures “often” permit leverage as high as 50-to-1 in those markets. [7] In other words, Coinbase’s U.S. rails are not a 50x casino in disguise; they are deliberately capped under a different regulatory regime.
That cap matters. The combination of CFTC oversight, margin rules, and a 10x ceiling does mitigate the most catastrophic flash-liquidation dynamics that plague offshore venues, where a 2% move can erase an entire 50x-levered position in seconds. But solving for extreme market-structure failure does not change the underlying arithmetic of a negative-sum game. Applying 10x leverage to highly volatile assets is still functionally wealth-destructive for the typical, under-capitalized retail trader. A safer liquidation engine does not make the game winnable for the average participant; it just makes the path to losing look more orderly.
CFTC Study on Retail Futures Traders (2024): Analyzed 36,538 retail traders in U.S. futures markets (2021–2022). The median retail trader incurred losses. The P&L distribution showed a left skew where losses outweighed gains overall, with bigger losses in the tails reaching thousands of dollars [16]. Larger initial losses strongly predicted permanent exit from the market. Using data on major crypto trading apps (August 2015–December 2022), BIS finds that the overall situation is negative for the media trader [15].
The statistics are brutal:
- “a majority of crypto app users in nearly all economies made losses on their bitcoin holdings.”
- They estimate that “over four fifths of users would have lost money” given typical buy‑and‑hold or periodic investment patterns.
- A median investor lost about $431 on their $900 investment which is roughly half the invested capital.
- Estimates of 80–95%+ loss rates for retail participants, with high-leverage positions (e.g., 10x+) having short lifespans (e.g., ~37 days average before total loss in some datasets). Liquidations routinely wipe out billions in volatile moves [17].
The Trust Halo: When Safety Signals Backfire
This is the crux of the problem, and the best causal evidence for it comes from the UK’s Financial Conduct Authority rather than from U.S. regulators.
The FCA’s 2024 and 2025 cryptoassets consumer research, based on large-scale YouGov surveys, found that 26% of non-holders in 2024 and 25% of current or prospective users in 2025 said they would be more likely to invest in crypto if it were more regulated [11]. This is a UK sample, but the underlying behavioral economics demonstrates that institutional legitimacy and regulatory language signal safety. These are common human biases, and they are exactly the biases that a trusted consumer-finance brand can activate.
That matters for how Coinbase’s own product copy works. The December 2025 System Update announced that derivatives trading would be “as easy as buying bitcoin” and invited users to “make bigger moves with less upfront capital.” [1] The spring 2026 update added real world asset perpetual futures with thematic exposure to AI, China, defense, and tech indices, described as “the first perpetual-style equity index futures listed on a U.S.-regulated exchange,” alongside Pre-IPO perps for SpaceX, Anthropic, and OpenAI [10]. Its gold and silver perpetuals blog framed leveraged commodity access as a logical extension of putting traditional assets on crypto rails. [8]
None of this resembles a carefully segregated hazard annex. It resembles consumer-growth design embedded in a trusted consumer brand.
When a firm with Coinbase’s reach builds this mix of products into a single, trusted interface, many users will interpret the very fact of inclusion and regulation as a safety signal even if the underlying risk profile has not changed. If Coinbase believes its U.S. retail base is somehow immune to the trust halo documented by the FCA, it has internal user-outcome data that could prove it. Until that data is published, the FCA’s work remains the best empirical baseline available. [11][12]
The Casino Didn’t Close — It Changed Games
Memecoin mania has cooled. Speculative appetite has not.
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Perpetual futures trading volume reached $61.7 trillion in 2025, up 29% year-over-year, according to CryptoQuant data cited in the Reuters coverage of the CFTC approval. [7] Coinbase acquired Deribit — the dominant global crypto-options exchange — for $2.9 billion in May 2025, gaining access to an order book with over $31 billion in Bitcoin options open interest. [9] The CFTC’s May 2026 no-action letter then allowed Coinbase to route U.S. users into those global liquidity pools [13].
After Coinbase’s Q1 2026 earnings miss — revenue of $1.41 billion against an expected $1.52 billion, and a net loss of $394 million — CFO Alesia Haas told CNBC the company was working to “diversify the things that people can trade so that as markets shift, as different behaviors shift, we’ll always have something that people want to trade.” Derivatives trading volume at Coinbase grew 169% year-over-year to $4.2 billion in Q1. [14]
That is not a company retreating from speculation when crypto trading cools. It is a company systematically building alternatives so the speculative funnel never empties. The casino didn’t close when memecoins faded. It changed games, put on a suit, and got a CFTC license.
What Would Change the Verdict
None of this is an argument that Coinbase is acting in bad faith. The distinction between a curated token sale with KYC, issuer lockups, and a structured allocation model and a permissionless Pump.fun launch is real. On the narrow question of fraud, Coinbase’s regulated rails are demonstrably better.
What would change the broader verdict is evidence — specifically, first-party, audited P&L data on the realized outcomes of Coinbase’s retail users on its speculative surfaces: the Launches tab, leveraged perpetuals, experimental spot listings. If that data showed Coinbase users losing money at materially lower rates than equivalent users on unregulated venues, the harm-reduction defense would have empirical footing.
That data has not been published. The company eager to describe its guardrails, lockups, and allocation structures has not published what happens to the people on the other side of those innovations.
Until it does, the most defensible reading of the available evidence is this: Coinbase is making speculative crypto cleaner, more compliant, and easier to observe. It has not demonstrated that it makes it good for ordinary consumers. The trust-halo evidence suggests it makes the casino more socially acceptable — and therefore easier to walk into.
The cleaner casino is still a casino. It just has better branding and a CFTC registration. And it reaches people who would never have wired money to an offshore exchange.
Endnotes
[1] Coinbase, “System Update: The Future of Finance Is on Coinbase,” December 17, 2025 — https://www.coinbase.com/blog/system-update-the-future-of-finance-is-on-coinbase
[2] Coinbase, “System Update: Take Control of Your Money with Coinbase,” June 2026 — https://www.coinbase.com/blog/system-update-take-control-of-your-money-with-coinbase
[3] CoinDesk / Yahoo Finance, “Coinbase to Label Some Assets as ‘Experimental’ in Bid to Boost Transparency,” March 7, 2022 — https://finance.yahoo.com/news/coinbase-label-assets-experimental-bid-205254551.html
[4] Solidus Labs, “2025 Rug Pull Report: Rug Pulls and Pump-and-Dumps on Solana,” May 2025, as reported by Bitcoin.com News — https://news.bitcoin.com/report-exposes-98-6-of-solana-meme-coins-on-pump-fun-as-fraudulent/
[5] Galaxy Research, “Who Really Profits From Meme Coins?” October 2025, as reported by Yahoo Finance — https://finance.yahoo.com/news/really-profits-meme-coins-galaxy-053048666.html
[6] Coinbase, “Perpetual Futures Have Arrived in the U.S.,” July 21, 2025 — https://www.coinbase.com/blog/perpetual-futures-have-arrived-in-the-us
[7] Reuters, “Coinbase, Kalshi Bring Regulated Perpetual Crypto Futures to U.S. Investors,” May 29, 2026 — https://www.reuters.com/legal/government/coinbase-kalshi-bring-regulated-perpetual-crypto-futures-us-investors-2026-05-29/
[8] Coinbase, “The Future of Gold and Silver Trading Is on Coinbase” — https://www.coinbase.com/blog/the-future-of-gold-and-silver-trading-is-on-coinbase
[9] Analytics Insight, “Coinbase Opens Regulated Crypto Perpetual Futures to U.S. Traders,” June 2026 — https://www.analyticsinsight.net/news/crypto-news-today-coinbase-opens-regulated-crypto-perpetual-futures-to-us-traders
[10] Yahoo Finance / Benzinga, “Coinbase Is Bringing Perp-Style Index Futures to Allow Traders to Speculate on AI, China and US Defense Industry,” June 2026 — https://finance.yahoo.com/markets/options/articles/coinbase-bringing-perp-style-index-164653687.html
[11] FCA / YouGov, “Cryptoassets Consumer Research 2025 (Wave 6),” December 2025 — https://www.fca.org.uk/publications/research-notes/cryptoassets-consumer-research-2025
[12] FCA / YouGov, “Cryptoassets Consumer Research 2024 (Wave 5),” November 2024 — https://www.fca.org.uk/publications/fca-research/research-note-cryptoassets-consumer-research-2024
[13] TradingView / NewsBTC, “Coinbase to Bring Global Crypto Derivatives to U.S. Institutions After CFTC Nod,” May 29, 2026 — https://www.tradingview.com/news/newsbtc:23bba8aee094b:0-coinbase-to-bring-global-crypto-derivatives-to-us-institutions-after-cftc-nod/
[14] CNBC, “Coinbase (COIN) Earnings Q1 2026,” May 7, 2026 — https://www.cnbc.com/2026/05/07/coinbase-coin-earnings-q1-2026.html
[15] Giulio Cornelli & Sebastian Doerr & Jon Frost & Leonardo Gambacorta, 2023. “Crypto shocks and retail losses,” BIS Bulletins 69, Bank for International Settlements.
[16] Ferko, A., Mixon, S., & Onur, E. (2024). Retail traders in futures markets (OCE Staff Papers and Reports №2023–002). Office of the Chief Economist, U.S. Commodity Futures Trading Commission.
[17] https://blog.mexc.com/news/the-dark-side-of-crypto-leverage-trading-why-95-of-margin-traders-lose-money-and-how-10-billion-vanished-in-24-hours/
