Why prediction markets could drive users away from crypto exchanges

It can look like the next logical step for an “everything app.” Users already keep money on these platforms, so why not offer a tool that feels like betting but is framed as a financial product.

Santiago Roel Santos, founder and CEO of venture firm Inversion Capital, argues that the framing is the trap. In a recent post, he wrote that he likes the idea of prediction markets. But once these products sit inside mass-market fintech apps, they start behaving like a casino and can speed up user churn.

His point is not just that people can lose money. The bigger risk, in his view, is what “casino dynamics” do to the relationship between the user and the app. High-volatility event contracts shorten the path to liquidation, and liquidation often kicks a user out for good. Someone can close a trade at a loss, reload, and come back. But if their account gets wiped out or they burn out from constant drawdowns, the platform loses them entirely. For an app, a churned user is worth zero.

Robinhood is often the reference case in this debate. The company spent much of 2025 pushing prediction markets to a mainstream audience, and it regularly comes up in discussions about where this trend could lead next.

Next in line are other exchanges.

Coinbase said it is adding prediction markets as part of its “everything app” strategy and is doing it in a partnership with Kalshi. Around the same time, regulatory pressure grew louder. On Dec. 19, 2025, Coinbase filed lawsuits against Connecticut, Michigan, and Illinois, seeking confirmation that these contracts should be regulated at the federal level through the CFTC, rather than through a patchwork of state rules. States, for their part, often treat event contracts as gambling with new packaging.

Gemini is moving in the same direction, but it is leaning on formal market structure. The exchange launched Gemini Predictions nationwide through Gemini Titan, which holds a CFTC Designated Contract Market license. The product offers contracts tied, for example, to bitcoin’s price by a specific date. Gemini has highlighted execution speed and transparency.

Santos is not arguing about the licenses or the mechanics. He is arguing about incentives. In his view, crypto exchanges win early because they feel simple and modern. The real business gets built later, when a service grows with the customer and becomes where they run most of their financial life. If an app optimizes for peak adrenaline instead, it can end up stuck in a short cycle: sign up, trade, flame out, leave.

He suggests betting on the boring stuff instead: сredit cards, insurance, savings products. They may not spike engagement overnight, but they keep people around for years and become part of an everyday money routine.