Coinbase Becomes Latest DLT Firm Embracing UAE With CeFi Smart Contract Platform

Coinbase joins the increasing number of digital assets firms establishing operations in the United Arab Emirates

By: Samuel Haig Loading...

Coinbase Becomes Latest DLT Firm Embracing UAE With CeFi Smart Contract Platform

Coinbase announced the launch of Project Diamond, an institutional-facing smart contract platform that will soon enter Abu Dhabi Global Market’s RegLab sandbox.

Revealed on Dec. 12, Project Diamond leverages Coinbase’s technology and its Ethereum Layer 2 network, Base, to facilitate digital asset creation and trading for CeFi institutions.

Coinbase emphasized the opportunity to institutions to realize significant efficiency savings by leveraging distributed technologies (DLT), estimating that just 0.25% of global assets have been migrated on-chain.

“Our goal is to close this gap by enabling institutional use of next-generation financial technology,” Coinbase said. “The platform leverages the Coinbase technology stack and Base to deliver secure, compliant, capital market activity that will continue to unlock institutional adoption of the global cryptoeconomy.”

Coinbase also announced that the first Project Diamond-native digital debt instrument was issued, distributed, and matured on Nov. 10. The asset was denominated in USDC, the second-largest stablecoin.

The pilot was executed as a technical demonstration for the Abu Dhabi Global Market (ADGM)’s Financial Services Regulatory Authority (FSRA) in preparation for Project Diamond joining the ADGM RegLab sandbox.

“The digital discount note… was transacted within a single application at near-instant settlement speed on Base,” Coinbase said. “This on-chain financial activity mirrors the massive flow of debt instruments that power global companies in traditional finance.”

Abu Dhabi promotes DLT

The news comes as Abu Dhabi and other states within the United Arab Emirates (UAE) are working to foster a robust local CeFi sector.

Abu Dhabi, the second-most populous state in the United Arab Emirates, introduced a regulatory framework for DLT on Nov. 2, including legal requirements for decentralized autonomous organizations (DAOs), blockchain foundations, and TradFi firms seeking to operate in the region.

“The introduction of the DLT Foundations Regime marks a revolutionary step forward, reinforcing ADGM's commitment to… digital asset development,” said Ahmed Jasim Al Zaabi, Chairman of ADGM.“

Abu Dhabi followed up with the launch of an interactive online “Crypto Hub” promoting local DLT firms and projects on Nov 17. The hub’s deployment coincided with Binance receiving regulatory to launch a local subsidiary.

Blockchain firms look to UAE

On Nov. 29, Iota launched the IOTA Ecosystem DLT Foundation in Abu Dhabi as part of a pivot towards the Middle East and North Africa region. The foundation will work to bridge the gap between legacy and web3 assets by bringing real-world assets on-chain.

On the same day, Paxos received in-principle approval to issue stablecoins and provide digital asset services from the FSRA. The regulator gave similar in-principle approval for eToro to broker digital assets, securities, and derivatives in Abu Dhabi on Sept. 20.

On Dec. 4, Phoenix Group, a digital asset mining firm, became the first crypto company listed on the ADX, Abu Dhabi’s stock market. Phoenix’s share price jumped 50% following a $371 initial public offering.

Abu Dhabi is not alone in its DLT push, with other states within the UAE making moves to embrace digital assets as well.

On Oct. 19, the Arab Emirate of Ras Al Khaimah launched the Digital Assets Oasis (RAK DAO), an economic free zone for firms operating in the blockchain and digital asset industries.

On Dec. 7, SBI Holdings, a top Japanese financial services company, signed a memorandum of understanding with Aramco, a leading energy firm and the national oil company of Saudi Arabia. The two firms will explore investing in each other’s digital asset portfolios per the document.