Coinbase, the US’ largest cryptocurrency exchange, will launch its tokenised securities offerings in Abu Dhabi after receiving regulatory clearance to establish a global tokenisation hub in the Emirati state.
Coinbase has placed its trust in the United Arab Emirates (UAE)’s support for tokenisation after announcing yesterday (11 August) that it has named Abu Dhabi as its international tokenisation hub.
Established at the International Financial Centre of Abu Dhabi, Coinbase International received a financial services permission (FSP) from the Abu Dhabi Global Market (ADGM)’s Financial Services Regulatory Authority (FSRA).
The licence enables Coinbase to conduct regulated financial and digital asset services in Abu Dhabi, paving the way for the cryptocurrency exchange to offer tokenised securities.
The tokenised securities registered and issued in ADGM are fully backed by underlying shares under the supervision of the FSRA, with verified token holders receiving full shareholder rights, including dividends and voting.
Coinbase stated in its release that investors in Abu Dhabi do not need a brokerage account to access its tokenised securities services, or a corresponding bank account. Investors are required to have an ADGM-approved digital wallet, which will allow them to transfer securities via supported blockchain networks to be stored in the wallets for collateral, yield or other decentralised finance (DeFi) services.
Brett Tejpaul, Co-CEO of Coinbase Institutional, said: “ADGM issued one of the world’s first regulatory frameworks for virtual assets in 2018.
“That reflected a genuine institutional commitment to innovation-forward regulation, executed with the rigour that global financial markets require. No major financial centre has yet built a framework that treats tokenised equities simultaneously as securities, blockchain-native tokens, and DeFi-composable assets.”
Why Coinbase chose the UAE
As Tejpaul highlighted, the UAE and Abu Dhabi specifically have one of the most established regulatory frameworks for digital assets and DeFi.
The ADGM oversees Abu Dhabi’s tokenisation regulations, which require operators to obtain an FSP and classify their tokens as digital securities. This includes shares, bonds or units of funds.
Tokenised securities offered by operators must be fully backed by the corresponding physical or traditional financial asset and managed by licensed custodians. Regulations mirror those of traditional capital markets, as the ADGM requires operators to issue and register tokenised securities under the FSRA’s agenda.
Operators are also subject to strict cybersecurity, data protection, encryption guidelines and software supervision to ensure consumer tokenised securities are protected.
Coinbase stated FSRA and ADGM “give us the regulatory foundation, the infrastructure, and the right partnership to bring capital markets to the people who need them most”.
The company, which also has regulatory licences in the UK and the European Union (EU), intends to use the Abu Dhabi international tokenisation hub to unlock access to capital markets for more than four billion people across the world.
Arvind Ramamurthy, Chief Market Development Officer of ADGM, said: “Coinbase’s establishment of its international tokenisation hub in ADGM is a strong endorsement of Abu Dhabi’s growing role in shaping the future of global finance.
“As tokenisation becomes an increasingly important part of capital markets infrastructure, ADGM remains committed to supporting innovation that enhances market access, transparency and investor confidence, while upholding the highest standards of regulatory oversight.”
Tokenisation unlocks access, said Coinbase CEO
Opening access to capital markets and other traditional finance services is a strategy Coinbase has been focused on over the last several years, a sentiment that was reiterated by its CEO, Brian Armstrong.
In a post on X on 9 August, Armstrong said tokenised stocks have allowed four billion unbrokered people to get exposure to US stock markets. He also highlighted crypto and stablecoins’ role in opening access for underserved people to instant liquidity.
“Crypto doesn’t get enough credit for the financial access it’s already unlocked for the world.
“Stablecoins brought the dollar on-chain. Anyone, anywhere can own a low inflation currency, and send it 24/7 for a fraction of a cent. DeFi gives anyone access to credit. Tokenised stocks let 4B unbrokered people get exposure to the US stock market. Bitcoin gives a store of wealth that can’t be inflated away.
“There’s more to do of course, but don’t forget about how far we’ve come.”
Armstrong has also been a key voice in the ongoing discussions around the US CLARITY Act, a regulatory framework which will bring the regulation of crypto and digital assets under the supervision of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC).
The crypto market bill’s Senate vote has been delayed multiple times, missing its most recent deadline of 7 August and rescheduled for a date in September.
