According to media reports, the central banks of Hong Kong and the United Arab Emirates (UAE) have come together to boost financial cooperation. The central banks have decided to collaborate on crypto regulations and promotion of financial technology development.
Recently, 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) released a statement revealing 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, governor of the CBUAE, said that he expects the relationship with the HKMA to be of a long-term nature. Simultaneously, 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.”
Sources reveal that the central banks of both nations also organized a seminar for the senior executives of banks in Hong Kong and the UAE. The seminar which took place after the meeting covered various topics like improvement in settlement of cross-border trade. It also witnessed leaders brainstorming ways in which UAE corporations can support Hong Kong’s financial infrastructure platforms for gaining access to Asian markets.
Notably, mBridge is one key application where UAE and Hong Kong are collaborating. It is a blockchain platform that facilitates storing multiple CBDCs while addressing the limitations of cross-border payment systems. The successful trial of the platform involves real corporate transactions that showcases the technology’s potential.
The collaboration between the central banks comes at the time when the Hong Kong’s Securities and Futures Commission’s (SFC) has allowed the virtual asset service providers (VASPs) to be open to dealing with Hong Kong’s retail investors starting June 1. In media interaction, 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 also claimed that the benefits out of crypto usage outweighed the risks. Highlighting the importance of regulation, the Treasury chief said that:
Despite the potential risks involved, (virtual assets) also carries with it fundamental value. So for these positive elements to be harnessed, these activities have to be allowed in a regulated way.
Notably, both the nations are progressing to rise as the crypto hub in recent times however has given ample importance to crypto regulation. Both the nations have strict and mandatory licensing regimes to operate in the nation.
Recently, UAE’s Central Bank also introduced new anti-money laundering (AML) and counter-terrorism financing guidelines for crypto businesses and financial institutions handling digital assets. The CBUAE counts on the new guidance to help firms understand risks of dealing with digital assets, and will help them follow AML and combat the financing of terrorism (CFT) rules.
The new rules are to come into effect at the start of July, contributing to strengthening the supervisory and regulatory frameworks of the central bank to combat money laundering and the financing of terrorism. Notably, all of this marks UAE’s efforts to be removed from the “grey list” of the Financial Action Task Force (FATF). FATF is an international anti-money laundering and anti-terrorism financing group and its grey list includes the names of the jurisdictions that require increased monitoring.