An official report issued by the central bank of Hong Kong in partnership with the UAE apex bank revealed two countries would work together to monitor crypto activities in the region. The partnership aimed at strengthening the financial relationship between Hong Kong and the UAE.
On May 30, Abu Dhabi hosted a bilateral meeting that focused on cross-border trade and the development of the financial system. In the meeting, the regulators proposed different strategies for improving cross-border trade and supporting the growth of the crypto sector.
Main Agenda of Bilateral Meeting
A report issued by the governor of the central bank of UAE, H.E. Khaled Mohamed Balama, revealed that the collaboration with the Hong Kong Monetary Authority (HKMA) would be a long-lasting partnership.
In support of Balama’s statement, the chief executive of the HKMA, Eddie Yue, stated that the partnership aimed at stimulating economic growth for both countries. Yue confirmed that UAE and Hong Kong have similar interests and numerous complementary strengths.
After completing the bilateral talks between the two countries, the regulators agreed to host a seminar for the top executive of the apex bank of Hong Kong and UAE. The seminar will equip the senior official with knowledge and skill for improving cross-border trade.
This will be done by examining different ways the UAE corporations can utilize the existing financial tools in Hong Kong. The seminar will also explore ways to access the mainland market effortlessly.
Before this, the UAE Securities and commodities authority (SCA) is set to issue an operating license for crypto firms on June 1. It was reported that the Hong Kong-based crypto custodian service provider HEX Trust was the first to seek regulatory approval for the virtual assets service provider (VASP) license.
In a meeting with the French news site, the Agence France-Presse, an official from the Hong Kong treasury Christopher Hui revealed that the regulators agreed on May 30 to allow the retail investors to buy and sell cryptos. Hui confessed that by adopting the new regulatory regime, the country would garner endless benefits from engaging in crypto trades.
Importance of the Collaboration of Hong Kong and UAE
Despite the risk associated with virtual assets, Hui believes that by adopting a new regulation will address most potential risks. Following the May 30 announcement of the new regulatory regime for virtual assets, best-performing crypto firms have revealed plans to expand their operations to Hong Kong.
Recently, the Hong Kong regulators announced that crypto exchanges CoinEx, OKX and Huobi are seeking to acquire licenses to operate in the region. Some proposals included improving the transaction speed and minimizing the reliance on the US dollar.
This improvement in cross-border trade aims to support the development of central bank digital currency (CBDC). In their argument, some policymakers urged the regulators to minimize the cost of developing the CBDC.
In March, the central bank UAE announced plans to complete the development of CBDC. Based on the central bank report, the developers plan to launch the digital fiat in 2024. At the beginning of May, the Hong Kong monetary authority revealed plans to roll out the digital dollar.
Review of Development of CBDC
The monetary authority confirmed that approximately sixteen tech firms would be involved in developing the Hong Kong digital fiat use case. Primarily the involved parties would explore effective payment systems, tokenized assets and Web3 transaction methods.
Besides developing the digital dirham, the UAE and Hong Kong regulators have teamed up to develop mBridge, a unique blockchain network that supports the performance of CBDC. The team behind the mBridge plans to integrate emerging technologies that will address the challenges battling cross-border payment.
During the preliminary development of the mBridge, the developers plan to conduct multiple trials involving corporate transactions.Before this, the UAE Securities and commodities authority (SCA) started to issue an operating license for crypto firms.
It was reported that the Hong Kong-based crypto custodian service provider HEX Trust was the first to receive license approval.In an interview with The National, a Hong Kong-based fintech company Finoverse broadened its geographic presence to the UAE.
The Finoverse team opened a regional office in Dubai to support the firm in expediting the growth of blockchain and Web3 technologies.
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