Crypto exchanges are accelerating their expansion into prediction markets as falling digital asset prices and declining trading volumes push platforms to diversify their revenue streams, according to a report by the Financial Times.

Blockchain.com last week applied for a US licence to offer regulated prediction markets, while Binance US has also recently sought regulatory approval, joining Coinbase, Crypto.com and Gemini in targeting the rapidly growing sector.

Prediction markets allow traders to speculate on outcomes ranging from elections and sporting events to interest rate decisions and economic developments. Crypto platforms are developing their own offerings or partnering with established operators Polymarket and Kalshi to retain customers and capture new trading activity.

The expansion comes amid a prolonged downturn in digital assets. Bitcoin and ether have fallen 28% and 42%, respectively, over the past year, while XRP and Solana have lost around half their value.

Trading volumes on Polymarket and Kalshi surged more than 300% from $17bn in January to $72bn in September, according to data from The Block. Spot crypto trading volumes declined 18% over the same period.

Shares in listed crypto exchanges have also come under pressure, with Coinbase and Bullish nearly halving in value over the past year, while Gemini has fallen 82%.

Coinbase partnered with Kalshi earlier this year, while Crypto.com spun out its prediction markets business, OG.com, last month and sold stakes in both companies to Robinhood as part of a partnership agreement. Bullish has also applied for a US licence to offer event contracts.

The expansion faces regulatory obstacles, with several US states challenging prediction markets under gambling laws. Michigan regulators said this month that Coinbase had agreed to stop offering event contracts to customers in the state.

The shift reflects growing pressure on digital asset exchanges to establish revenue streams beyond cryptocurrency trading, as prediction markets emerge as an increasingly significant source of speculative trading activity.