Coinbase Institutional has secured a Financial Services Permission (FSP) from the Abu Dhabi Global Market (ADGM), enabling it to build a hub for tokenised securities. The licence covers the arrangement and custody of digital equities that are fully backed by underlying shares, allowing investors to transact using only a crypto wallet without needing a brokerage account or correspondent banking relationship for secondary transfers. However, redeeming proceeds into fiat currency still requires a traditional bank or brokerage account.
The regulatory framework treats tokenised equities as securities, blockchain-native tokens, and DeFi-composable assets simultaneously. Brett Tejpaul, co-chief executive of Coinbase Institutional, highlighted that no major financial centre had previously established such a comprehensive structure. The FSP provides regulated access to issuing tokenised equities with standard investor protections, including sanctions screening and asset freezing capabilities at the wallet level. ADGM operates under English common law, distinct from the UAE’s onshore Securities and Commodities Authority, and entities registered there do not automatically passport into other Gulf Cooperation Council jurisdictions.
This development signifies a critical maturation in the regulatory infrastructure for real-world assets on-chain. By securing an FSP in ADGM, Coinbase is leveraging a jurisdiction that combines English common law standards with progressive virtual-asset rules dating back to 2018. The ability to offer economic exposure to dividends while maintaining compliance with AML and sanctions obligations demonstrates that institutional-grade custody can coexist with blockchain composability. This moves tokenised equities beyond experimental pilots toward a regulated market structure where legal enforceability and technical functionality are aligned.
From an institutional adoption perspective, the primary challenge remains liquidity and distribution rather than technology. While Coinbase possesses significant retail and institutional reach, the utility of these digital securities depends on whether other jurisdictions permit their residents to hold ADGM-issued assets. The product's success will be determined by the depth of secondary markets and the willingness of global custodians and market makers to connect to these specific rails. Investors should watch for the first named tokenised securities issued under this permission and any reciprocal licensing arrangements that extend distribution beyond the UAE.
