Coinbase Expands Tokenisation Push With Abu Dhabi Regulatory Approval

Coinbase said that the Financial Services Regulatory Authority of Abu Dhabi Global Market ADGM has provided the exchange with Financial Services Permission to act as an intermediary in investments and custody services for the upcoming tokenised security service. The approval puts Coinbase into the regulated financial services framework of ADGM as the company prepares for the issuance of traditional assets through blockchain technology. The securities that will be registered and issued via the platform will have an underlying asset and be regulated by the FSRA. 

Coinbase Builds on Project Diamond to Expand Blockchain-Based Financial Products

As per the report by Fortune, the verified holders will enjoy economic rights based on the asset, while some shareholder rights, like voting rights, are dependent on the vesting requirements of the securities. The investors would be allowed to store the products in their digital wallets without necessarily having an ordinary trading account or a corresponding bank account in respect of dealing in the financial instruments. Coinbase added that the transfer would still be subject to sanctions checks, with the assets being frozen or seized at the wallet when necessary. 

Abu Dhabi had already been included in the institution-oriented tokenisation strategy of Coinbase before this licence. The exchange had started Project Diamond as a tokenisation solution to launch blockchain-based financial instruments, with an initial focus on digital debt instruments for institutions. Project Diamond has been given the go-ahead by ADGM regulators before the issuance of its first debt instrument, which is a short-term discount note issued in USDC and on the Coinbase Base blockchain. The platform was initially accessible only to institutional investors outside the US.

“This is the most significant step we have taken yet toward building the infrastructure for a more open, more accessible global financial system,” Coinbase said when announcing the approval on August 11.

The network makes use of Coinbase's institutional tech stack, which includes custody solutions, on-chain wallets and USDC settlements on Base. Peregrine, the flagship user of this platform, which is ADGM-regulated, is run by PSG Digital. According to Coinbase Institutional co-CEO Brett Tejpaul, ADGM's initiative to implement a virtual asset regulatory framework back in 2018 played a critical role in Coinbase's selection of this jurisdiction. 

Coinbase itself is no stranger to providing tokenised equities. In June, the exchange announced tokenised shares of SpaceX, Nvidia, Google, Strategy and Bitmine, which the company claimed were provided in a 1:1 ratio. The users would be able to buy, hold, trade and redeem those tokens using blockchain technology and get economic exposure to the dividend that comes from the shares. The launch of these tokens is part of the Everything Exchange initiative that Coinbase has started.