China and the United Arab Emirates (UAE) have pledged to enhance their cooperation in combating cybercrime associated with cryptocurrency. The latest commitment was made through an official joint statement on May 30, following the state visit of UAE President Mohammed bin Zayed Al Nahyan to China.

The announcement comes as Hong Kong data shows a significant increase in crypto fraud activity between 2022 and 2023. The joint statement highlighted specific areas of concern, including telecommunications network fraud and online gambling. Both nations aim to curb illegal activities that may exploit cryptocurrencies, showcasing a shared determination to tackle these issues.

In addition to focusing on cybercrime, China and the UAE underscored their commitment to fighting money laundering, human trafficking, drug trafficking, and illegal immigration. This broader effort addresses illicit financial flows that could involve digital assets.

Although the statement did not outline specific regulations targeting cryptocurrency, it indicated a coordinated approach by both countries to address potential misuse of crypto technologies.

Strengthening Bilateral Trade and Investment

Beyond security concerns, the statement emphasized the importance of supporting bilateral trade and investment partnerships. Both nations committed to promoting trade, facilitating investment, and developing tourism through the Joint Economic and Trade Committee.

Central Bank Digital Currency (CBDC) Cooperation

A notable aspect of the joint statement was the recognition of central bank digital currency (CBDC) in enhancing cross-border trade and investment. China and the UAE expressed their commitment to deepening bilateral and multilateral cooperation under the Memorandum of Understanding on Strengthening Central Bank Digital Currency Cooperation, signed by their central banks.

China praised the UAE for its pioneering effort in completing the first direct cross-border CBDC transaction, the “Digital Dirham,” valued at 50 million dirhams through the “Multilateral Central Bank Digital Currency Bridge (mBridge)” platform.

This milestone transaction has opened new opportunities for trade and investment between the two nations.

Future CBDC Projects

The Hong Kong Monetary Authority (HKMA) is already working on two CBDC-related projects, MBridge and e-HKD. The central banks of Hong Kong, China, Thailand, and the UAE, along with HKMA, are developing mBridge, a cross-border central bank digital currency initiative. This project is expected to be launched by mid-2024 and could provide an alternative to Swift’s dominant payment infrastructure, potentially leading to further payment fragmentation across other regions.

HKMA is also working on another CBDC-related project known as e-HKD. The digital currency has demonstrated various use cases, including payments, deposits, and investment scenarios.

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