Coinbase has just secured a Financial Services Permission from the regulator of Abu Dhabi Global Market (ADGM). This license, issued by the Financial Services Regulatory Authority (FSRA), paves the way for them to offer investment transaction arrangement and digital asset custody services. Under this new regulatory framework, Coinbase has officially designated Abu Dhabi as its primary international tokenization hub to expand outside of the United States.
The tokenized securities products set to launch will be pegged directly to real-world assets. Each token is backed by actual shares at a 1:1 ratio, ensuring its value is equivalent to the conventional stock market. Users who have completed the identity verification process will not only hold the tokens, but also receive full rights to dividend distributions and voting power within the company. The investment process cuts out intermediaries: investors no longer require conventional brokerage accounts, but instead simply connect a compatible blockchain wallet to the platform.
Full Control in the Hands of the Exchange
Even though this ecosystem operates on blockchain infrastructure, Coinbase is not compromising on its compliance standards. Every buying, selling, or asset transfer transaction must still go through sanctions screening. The company also holds the authority to take unilateral action, including freezing or seizing user assets directly at the crypto wallet level if violations are found.
This strict compliance approach aligns with the vision of local regulators to build a structured framework. Co-CEO of Coinbase Institutional, Brett Tejpaul, highlighted the region’s unique position in the crypto industry. “No major financial hub has built a framework that treats tokenized equity simultaneously as a security, a blockchain-native token, and a DeFi-composable asset,” he said.
Separation of Operational Focus in the Middle East
Coinbase’s presence in the United Arab Emirates is now divided into two operating regions with different service focuses. Abu Dhabi controls equity tokenization and custody services under ADGM supervision, while Dubai remains the base of operations for the international derivatives market. This separation of functions automatically places Coinbase under two different regulators, given that Dubai’s operations are overseen separately by the Virtual Assets Regulatory Authority (VARA).
This expansion move is not dominated solely by pure crypto industry players. Bank of New York (BNY) is also known to be currently building its digital asset custody services within the ADGM jurisdiction, reinforcing the Middle East’s appeal to conventional financial institutions.
However, this new operational license from Abu Dhabi has strict jurisdictional boundaries. The license document does not automatically greenlight Coinbase to offer tokenized securities products to its US investor base. Access to the US market still requires separate approval from the Securities and Exchange Commission (SEC), which remains the primary regulatory hurdle in their home country. Reported by crypto.news.
Read also: What Is DeFi (Decentralized Finance)?
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
