Crypto Regulation Alliance: Hong Kong and UAE Central Banks Unite
As the United States grapples with a banking crisis and cryptocurrency crackdown, Hong Kong and the UAE are advancing in the realm of crypto regulation.
Representatives from the Central Banks of these two regions convened in Abu Dhabi to discuss new terms of collaboration in the realm of digital asset regulation, as reported by the Hong Kong Monetary Authority (HKMA).
According to the agreed-upon terms, a coalition group will be formed to refine and implement a legal framework for cryptocurrencies. This expert group will also be responsible for strengthening the relationship between Hong Kong and the UAE in aspects of financial infrastructure and cross-border trade settlements.
Furthermore, the Central Banks plan to jointly promote and sponsor educational initiatives aimed at advancing technology within the financial sector, in addition to exchanging knowledge and expertise.
The leadership of the CBUAE (Central Bank of the United Arab Emirates) and HKMA believe that Hong Kong and the UAE share mutual interests and can reap reciprocal benefits. They propose that a robust financial partnership between the two centers will help them rapidly secure a leading role in the global crypto market.
As a reminder, Hong Kong and the UAE are working in tandem on the mBridge blockchain project. This distributed ledger is designed to facilitate regional CBDCs (Central Bank Digital Currencies) in accelerating international payments. Corporate transactions have already been trialed on the blockchain.
The burgeoning cooperation between these state and administrative regions of China in the cryptocurrency sphere is also evidenced by the expansion of Hong Kong and Arab companies within each other's territories. For example, Finoverse, a Web3 platform based in Hong Kong, recently inaugurated a division in Dubai. Simultaneously, Hex Trust, a Hong Kong-based institutional crypto custodian, was the first to receive a license to provide its services in the UAE.
Pictured at a meeting in Abu Dhabi were Eddie Yue, Chief Executive of the Hong Kong Central Bank, and Khalid Mohammed Balama, Head of the Central Bank of the UAE. Source - Hong Kong Monetary Authority.
UAE aims to become a cryptocurrency hub
In April 2023, the Securities and Commodities Authority of the United Arab Emirates (UAE) began issuing licenses for international cryptocurrency companies. This initiative followed a declaration by the UAE's Prime Minister in March of the same year, where he announced the country's ambition to become a prominent player in the cryptocurrency market.
This intention is substantiated by significant funding. Hub71, an organization in the UAE, sponsors blockchain projects and other cryptocurrency infrastructure solutions.
Overall, the UAE is open to digital assets and is fostering conditions conducive to the growth of Web3 companies. This is evident from the country hosting more than 500 startups.
Brian Armstrong of Coinbase suggests that the UAE could be chosen as a strategic region for their cryptocurrency exchange operations.
Hong Kong embraces crypto regulation
Starting June 1, 2023, Hong Kong will enforce a new regulatory framework for the cryptocurrency sector. The revised document establishes specific and streamlined regulations for companies providing digital asset services to individual investors. Now, cryptocurrency exchanges can operate in this jurisdiction without regulatory threats, selling altcoins and other cryptocurrencies.
According to the Hong Kong Securities and Futures Commission (SFC), trading platforms must inform clients about their risk tolerance, admit only those who have a sound understanding of the cryptocurrency market and trading, and place limits on trading volumes per user, among other things.
Several cryptocurrency exchanges, including Huobi, OKX, and CoinEx, are interested in obtaining a license to trade cryptocurrencies in Hong Kong.
As such, Hong Kong may not only become an Asian cryptocurrency hub but also a significant global cryptocurrency center. This perspective aligns with the views of Hong Kong's Treasury Secretary, Christopher Hui. While he acknowledges that embracing digital currencies can have many potential negative impacts, he also emphasizes the global importance of cryptocurrencies for the financial market.
