In June Coinbase announced plans to issue US tokenized stocks offshore, using the Base blockchain it founded in 2023. Yesterday it went live with the first four tokenized stocks issued out of the Abu Dhabi Global Market, AAPLc, GOOGLc, METAc, NVDAc, after the prospectuses were approved earlier this month. The tokens, which are backed 1:1 by the underlying stocks, are not meant to circulate in the US or certain other jurisdictions and will only trade via decentralized exchanges (DEXs), especially Aerodrome, which Coinbase Ventures backs.
The structured notes from Ondo Global Markets, Robinhood and xStocks make their holders creditors of the issuer, not owners of shares. By contrast, the Coinbase tokens give holders a beneficial interest in real Apple, Google, Meta and Nvidia stock that the issuer holds on trust. But as we show below, the trust aspect could be called into question for all token holders, and even more so for unvested ones.
Like the structured notes, Coinbase tokens can circulate freely via DeFi in a similar manner to stablecoins, with only the on and off-ramps requiring compliance. But there are significant downsides to pseudonymous ownership versus going through compliance (noted later).
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