Hong Kong and UAE Central Banks Coordinate on Crypto Regulation

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The central banks of Hong Kong and the United Arab Emirates have announced their intention to strengthen their financial cooperation and work together on the regulation of virtual assets.

A bilateral meeting was held in Abu Dhabi, also on the agenda of financial infrastructure and cross-border trade agreements.

Last month, the UAE Securities and Commodities Authority began allowing crypto firms to apply for operating licenses and Hex Trust, a Hong Kong-based crypto custodian, was one of the first to do so. receive one.

Fintech and web3 platform Finoverse, which is headquartered in Hong Kong but recently opened an office in Dubai, recently told The National that it expects the two regions to cooperate more closely on blockchain technology. .

Their focus on cross-border trade settlements could open the possibility of using central bank digital currencies to speed up transfers and reduce costs, as well as a reliance on the US dollar.

Last March, the Central Bank of the United Arab Emirates announced that it planned to intensify its ambitions for a CBDC with the first phase of a strategy to launch a digital dirham which should be completed by this time of year. next.

The UAE and Hong Kong have previously worked together to build mBridge, a new blockchain that supports multiple CBDCs and aims “to tackle the limitations of current cross-border payment systems”. Real business transactions have been conducted in a trial.

Things are a bit more complicated in Hong Kong. While the region is supposed to have a high degree of autonomy until 2047, critics have accused China of installing more and more pro-Beijing candidates in positions of power.

China’s quest to launch a CBDC is at an advanced stage as the digital yuan continues to roll out rapidly to the masses. Last month, it was announced that city officials in Changshu would be fully paid using e-CNY, a milestone given that it is home to 1.7 million people.

However, it doesn’t look like the digital yuan will be coming to Hong Kong anytime soon. Earlier this month, its monetary authority announced it was launching a pilot for an electronic form of the Hong Kong dollar. Sixteen companies will be involved in exploring use cases such as full payments, tokenized deposits, and settlements of Web3 transactions and tokenized assets.

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