In order to better regulate virtual assets, the central banks of Hong Kong and the United Arab Emirates have announced intentions of strengthening their financial cooperation.
Financial infrastructure and cross-border trade settlements were also on the agenda of a bilateral discussion that took place in Abu Dhabi.
Hex Trust, a Hong Kong-based cryptocurrency custodian, was one of the first to receive one after the UAE’s Securities and Commodities Authority started enabling crypto businesses to apply for operating licenses.
Finoverse, a Hong Kong-based fintech and Web3 platform that recently launched an office in Dubai, told The National that it anticipates closer collaboration between the two countries on blockchain technology.
Their emphasis on cross-border trade settlements may pave the way for the adoption of central bank digital currencies, which would facilitate faster transfers at lower costs while reducing reliance on the US dollar.
The Central Bank of the UAE previously declared that it intended to increase its goals for a CBDC, with the first stage of a plan to introduce a digital dirham expected to be finished by this time next year.
The UAE and Hong Kong have already been collaborating to create mBridge, a new blockchain that supports numerous CBDCs and seeks to address the shortcomings of the present-day cross-border payment systems. In a trial, actual business transactions were made.
In Hong Kong, things are slightly more challenging. Critics claim that China is progressively elevating pro-Beijing candidates to positions of authority even though the region is supposed to retain a high degree of autonomy until 2047.
The rollout of the digital yuan to the general public is advancing quickly, and China’s efforts to establish a CBDC are at an advanced stage. An important milestone was reached last month when it was revealed that Changshu’s 1.7 million residents’ civil servants would get their entire salaries via e-CNY.
The digital yuan does not appear to be coming to Hong Kong any time soon, though. The Hong Kong dollar will now be available electronically, the country’s monetary authorities said earlier this month. The exploration of use cases for fully fledged payments, tokenized deposits, and the settlement of Web3 transactions and tokenized assets will involve sixteen companies.
