Coinbase expands UK stablecoin push as New York prediction markets case moves federal

UK rollout paired with lending expansion and regulatory pushback

Coinbase launched crypto-backed lending for UK users two days before the tGBP listing, allowing borrowing in USDC against Bitcoin, Ethereum and cbETH through Morpho, the open-source protocol on Base. The company said UK users can borrow up to $5 million in USDC depending on the value of pledged Bitcoin. The lending product first launched in the United States in January 2025 and had generated more than $2.17 billion in total loan originations through Morpho by mid-April 2026.

The company used the stablecoin rollout to push back on proposed UK rules. Coinbase argued that requiring systemic issuers to hold 40% of reserves in unremunerated cash at the central bank is “not risk-based,” and said “implementing a ‘regulatory speed limit’ or cap on stablecoin issuance is effectively a cap on innovation.” Coinbase also said stablecoins should be allowed to function as settlement assets in wholesale tokenization markets outside the sandbox. Brian Armstrong said stablecoins are “the best form of money.”

Market data showed a stablecoin sector exceeding $300 billion in capitalization, with Coinbase projecting potential growth to $2 trillion and reporting more than $30 trillion in transaction settlement volume during 2025. Sandeep Nailwal, CEO of the Polygon Foundation, said, “Countries slow to adopt stablecoins will face the same problem as late internet adopters,” adding that cross-border payments still cost about 6% and can take days, while stablecoins can settle in seconds for fractions of a cent.

UK enforcement activity intensified alongside the rollout. The Financial Conduct Authority carried out what was described as its first joint operation against illegal peer-to-peer crypto trading in London, raiding eight premises, issuing cease-and-desist letters and collecting evidence for ongoing criminal investigations. The FCA position was that no FCA-registered peer-to-peer crypto traders or platforms currently operate in the UK. The full crypto-asset regime is not expected to take effect until October 2027, with authorization applications opening from September 2026.

Coinbase moves New York prediction markets case to federal court

Coinbase escalated its U.S. legal fight when Paul Grewal said the company removed Letitia James’ lawsuit from state court to federal court on Wednesday. Grewal said the case raises “disputed and substantial questions of federal law” and is subject to “complete preemption.” The lawsuit was filed on Tuesday against Coinbase Financial Markets and Gemini Titan, alleging their prediction-market offerings violated New York gambling law by allowing bets on sports, entertainment and elections without a state gaming license, including users between 18 and 20 years old.

New York is seeking fines, forfeiture of alleged illegal profits, restitution for customers and an order blocking similar offerings in the state unless companies comply with state law. Grewal said in a separate post that these are “federally regulated national exchanges” under the CFTC and that Coinbase will continue to “fight for the federal oversight of these markets that Congress intended.” Coinbase launched prediction markets across all 50 states, including New York, on Jan. 28, offering trading on “any real-world outcomes” across sports, politics and culture.

The dispute forms part of a wider regulatory conflict. 11 states have recently taken legal action against prediction-market platforms, while the CFTC has argued it holds exclusive authority over registered event contracts. That position was reflected when the CFTC sued gaming regulators in Illinois, Connecticut and Arizona on April 2, and when the CFTC and the U.S. Department of Justice asked a federal court on April 8 to block Arizona from enforcing gambling law against Kalshi’s event contracts.