Coinbase Secures Abu Dhabi License for Tokenized Securities
Coinbase has secured regulatory permission in Abu Dhabi to facilitate investment transactions and provide custody services, as it sets up a global hub for tokenized securities and on-chain capital markets.
Summary
- Coinbase has obtained Financial Services Permission from Abu Dhabi Global Market’s financial regulator.
- This approval allows the facilitation of investment deals and custody services related to tokenized securities.
- Verified token holders will be granted shareholder rights, which include dividends and voting privileges.
- Coinbase is looking to expand its tokenization and derivatives operations out of both Abu Dhabi and Dubai.
Coinbase receives approval for tokenized securities
In a statement from Abu Dhabi Global Market, Coinbase revealed that the Financial Services Regulatory Authority has granted it Financial Services Permission to execute investment transactions and provide custody services.
This authorization allows Coinbase to establish a regulated foundation within ADGM, Abu Dhabi’s international financial center, for issuing and managing digital securities associated with traditional financial assets. Under this framework, Coinbase will register and issue securities in ADGM, all under FSRA supervision.
Rather than solely focusing on cryptocurrency trading, Coinbase aims to make Abu Dhabi its primary international center for tokenization outside the United States. The services developed here will focus on bringing securities and other capital market offerings onto blockchain platforms.
Coinbase states that each tokenized security will be anchored by an underlying share. Verified holders will have rights associated with the represented stock, including dividends and voting rights as described in the relevant prospectus.
Dividends will be automatically reinvested according to product conditions. Certain voting and redemption rights will depend on whether holders satisfy specific vesting criteria, indicating that full access to shareholder rights may not be immediate or consistent.
The announcement did not specify which shares Coinbase will initially tokenize, the blockchain networks that will support them, or a specific launch date for the initial offering. It also did not clarify which countries’ residents will be permitted to purchase the securities.
Wallets to replace traditional brokerage accounts
In contrast to traditional stock purchases, investors won’t need a conventional brokerage account or correspondent banking relationships to hold the planned securities, according to Coinbase. Eligible users will require only a compatible blockchain wallet.
Transactions will still adhere to regulatory regulations, even when conducted via wallets. Coinbase indicated that each transaction will undergo ongoing sanctions screening, retaining the ability to freeze or seize assets at the wallet level as regulations demand.
This control system integrates restrictions directly into the tokenized securities infrastructure instead of relying solely on validations during transactions. Coinbase has presented this approach as a way to comply with securities regulations while integrating blockchain-based assets with decentralized finance applications.
Brett Tejpaul, co-CEO of Coinbase Institutional, remarked that ADGM has established one of the original regulatory frameworks for virtual assets as early as 2018 and continues to enhance regulations for blockchain-based financial products.
“No major financial center has yet built a framework that simultaneously treats tokenized equities as securities, blockchain-native tokens, and DeFi-composable assets,” stated Tejpaul.
Arvind Ramamurthy, ADGM’s chief market development officer, noted that the proposed hub reinforces Abu Dhabi’s standing in blockchain-based finance. He stressed that the financial center will continue to support products designed to improve market accessibility and transparency while ensuring regulatory compliance.
The envisioned ownership model aligns with Coinbase’s past initiatives on 1:1-backed tokenized stocks with Base, its Ethereum Layer-2 network. In July, Crypto.news reported that Base founder Jesse Pollak indicated that they were nearing the launch of equities supported by actual underlying shares.
Pollak differentiated the new offering from stock-linked derivatives, which track stock prices without offering ownership of the underlying shares. At that time, neither Base nor Coinbase had disclosed details on the custody arrangements, issuance processes, or eligible securities related to the product.
Abu Dhabi license broadens Coinbase’s UAE presence
From Abu Dhabi, Coinbase seeks to grow its tokenized-securities and on-chain capital markets operations, while Dubai will serve as a base for its international derivatives activities. The company considers these two segments among its most ambitious initiatives outside the United States.
The two locations also function under different regulatory regimes. ADGM and its FSRA oversee financial services in Abu Dhabi’s financial free zone, while the Dubai Virtual Assets Regulatory Authority regulates virtual-asset operations in or from Dubai, excluding those in the Dubai International Financial Centre.
Coinbase’s decision to expand into the UAE aligns with other financial entities establishing regulated digital-asset services in Abu Dhabi. In May, Crypto.news reported on BNY’s plans with Finstreet and ADI Foundation to launch custody solutions starting with Bitcoin and Ether before integrating stablecoins and tokenized tangible assets.
BNY confirmed that their operations would take place within ADGM and would be subject to final agreements and regulatory approvals. The proposed service will leverage Finstreet’s licensed trading, settlement, custody, and investment infrastructure alongside the ADI Chain blockchain network.
Coinbase is also expanding its product offerings for professional investors in the United Kingdom. The recent introduction of UK derivatives includes over 170 contracts covering cryptocurrencies, equities, commodities, and foreign exchange.
Eligible professional clients in the UK will progressively gain access to perpetual contracts that allow ongoing trading with leverage of up to 50 times. Dated futures will enable leverage of up to 20 times, initially covering crypto assets.
U.S. regulations remain crucial for Coinbase’s tokenization efforts
For U.S. investors, the Abu Dhabi approval alone does not authorize Coinbase to offer ADGM-issued securities within the United States. Any domestic product featuring tokenized shares will remain subject to U.S. securities laws and SEC oversight.
In June, discussions regarding U.S. exemptions centered around a potential SEC framework that would permit companies to test blockchain-based securities under modified regulatory guidelines. Legal experts and market participants cited by Reuters anticipated SEC Chair Paul Atkins to propose an innovation exemption; however, the regulator has yet to finalize the mentioned framework.
Coinbase had already disclosed intentions for tokenized shares that are backed one-for-one by underlying securities as those discussions unfolded. CoinGecko data mentioned in the June report indicated that the number of listed tokenized stocks surged from 14 in January 2024 to 478 by May 2026, marking an increase of over 3,300%.
Competition has also emerged in the U.S. market. Dinari recently launched tokenized versions of all S&P 500 stocks for eligible American investors in August, utilizing self-custody wallets funded with USDC. The company stated that each token is backed by a corresponding underlying security held with a regulated custodian, including voting, dividend, and redemption rights.
In addition to tokenization, Coinbase recently offered eligible UK customers access to U.S. equities starting August 6. This phased service includes nearly 4,000 stocks, supports purchases with pounds or USDC, and allows fractional investments starting from £1, with Apex handling the execution and clearing of orders while holding shares in the United States.