Central Banks of Hong Kong and the UAE unite on crypto regulations

The central banks of the two countries aim to boost financial cooperation and revolutionise international transactions

Published: Jun 1, 2023 06:55:36 PM IST

Updated: Jun 2, 2023 09:02:14 AM IST

Image: Shutterstock

The central banks of Hong Kong and the United Arab Emirates’ (UAE) have joined forces to boost financial cooperation. They have decided to collaborate on cryptocurrency regulations and promotion of financial technology development.

Abu Dhabi hosted a bilateral meeting for discussions on financial infrastructure and settlement of cross-border trade between the two countries.

The Hong Kong Monetary Authority (HKMA) said on Tuesday, May 30 that it met the Central Bank of the United Arab Emirates (CBUAE) counterparts, and the two agreed on “strengthening cooperation” on “virtual asset regulations and developments.”

The two central bank authorities also committed to hold discussions on “joint fintech development initiatives and knowledge-sharing efforts” with the respective innovation hubs of each region.

H.E. Khaled Mohamed Balama, CBUAE governor said that he expects the relationship with the HKMA to be of a long-term nature. Eddie Yue, HKMA chief executive said that the relationship will be economically beneficial for both jurisdictions as they share “many complementary strengths and mutual interests.”

The central banks of both countries also held a seminar for the senior executives of banks in Hong Kong and the UAE after the meeting that covered various topics like improvement in settlement of cross-border trade and the ways in which UAE corporations can support Hong Kong’s financial infrastructure platforms for gaining access to Asian markets.

mBridge is one application where UAE and Hong Kong are collaborating. It is a blockchain platform that enables multiple CBDCs and addresses the limitations of cross-border payment systems. The successful trial involves real corporate transactions that showcases the technology’s potential.

The collaboration comes at the time of Hong Kong’s Securities and Futures Commission’s (SFC) allowance to virtual asset service providers (VASPs) to be open to dealing with Hong Kong’s retail investors starting June 1.

Christopher Hui, Hong Kong’s treasury chief said that the city has allowed crypto trading for retail investors under its new regulatory regime because “virtual assets are going to stay”. Hui claimed the benefits arising out of cryptocurrency utilisation outweighed the risks. “Despite the potential risks involved, (virtual assets) also carries with it fundamental value,” he said, noting the importance of regulation. “So for these positive elements to be harnessed, these activities have to be allowed in a regulated way.”

Cryptocurrency exchanges like CoinEx, Huobi and OKX have filed applications for having dedicated crypto trading services in Hong Kong since the SFC announcement.

The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash