# CRYPTO 101

FDUSD: Hong Kong’s USD Stablecoin

FDUSD

KEYTAKEAWAYS

  • FDUSD is fully backed by USD reserves, ensuring 1:1 stability and seamless exchange for users.
  • Operating on Ethereum and BNB chains, FDUSD supports low-cost, efficient transactions and programmability.
  • Strategic partnerships and Binance support highlight FDUSD's potential for widespread adoption and growth.

CONTENT

FDUSD, launched by First Digital Trust, is a USD-pegged stablecoin on Ethereum and BNB chains. Backed 1:1 by USD reserves, it offers programmability, low fees, and decentralized network benefits.

 

 

 

WHAT IS FDUSD?

 

FDUSD, also known as First Digital USD, is a stablecoin pegged to the US dollar, launched on June 1, 2023. This launch coincided with the introduction of Hong Kong’s new licensing regime for virtual asset service providers, enhancing its relevance and regulatory compliance.

 

According to the official whitepaper, FDUSD issued by First Digital is fully backed by USD assets at a 1:1 ratio. These reserves are held in segregated accounts with regulated financial institutions and are monitored and audited by independent third parties. Users can view FDUSD’s transparency reports on the official website.

 

The issuance of FDUSD aims to provide users with a reliable digital currency that reduces the impact of cryptocurrency market volatility. Additionally, FDUSD is designed as a programmable digital asset that can interact with financial smart contracts, custody services, and insurance without intermediaries. This significantly improves efficiency, security, and reduces the cost of financial transactions. Compatible with next-generation Web3 technologies, FDUSD allows for the development of new solutions that unlock new value and further integrate with everyday transactions.

 

Currently, FDUSD is only issued on the Ethereum and BNB chains, but it will gradually support more blockchains in the future. The contract addresses on Ethereum and BNB Smart Chain are:

 

  • Ethereum contract address: 0xc5f0f7b66764F6ec8C8Dff7BA683102295E16409

 

  • BNB Smart Chain contract address: 0xc5f0f7b66764F6ec8C8Dff7BA683102295E16409

 

Users can view relevant data through these addresses

 

>>> More to read : What Is Stablecoin ? Stable Virtual Assets


ISSUER OF FDUSD

 

The issuer of First Digital USD (FDUSD) is FD121 Limited, branded as First Digital Labs. Its parent company, First Digital Trust, is a qualified custodian and trust company headquartered in Hong Kong. On June 1, 2023, they officially announced the launch of FDUSD, a stablecoin pegged to the US dollar and regulated in Asia.

 

Upon the launch of FDUSD, First Digital stated that as a company registered under Hong Kong’s Trust Ordinance, they are required to hold all FDUSD reserves in segregated accounts with regulated financial institutions in Asia. This measure ensures that FDUSD reserves are not commingled with other assets of First Digital Trust Limited.

 

Notably, Binance founder CZ tweeted about the launch of FDUSD as soon as it was announced.

 

 

  • CEO of First Digital

 

Public information indicates that the CEO of First Digital is Vincent Chok.

 

According to LinkedIn, in addition to his role as CEO of First Digital, Vincent Chok has served as CEO of First Digital’s parent company, Legacy Trust Company Limited, since 2015. Furthermore, the current COO of First Digital, Gunnar Jaerv, previously held positions as the Head of Proprietary Trust and Head of the Digital Asset Department at Legacy Trust Company Limited, where he worked for seven years.

 

HOW FDUSD OPERATES

 

For every unit of FDUSD in circulation, the designated custodian, First Digital Trust Limited, securely holds an equivalent amount of USD reserves. This arrangement ensures that users can seamlessly exchange FDUSD.

 

FDUSD’s smart contract adheres to the widely recognized ERC-20 token standard and has undergone rigorous auditing by Peckshield, further enhancing its reliability and security.

To improve accessibility, FDUSD is issued on both the Ethereum and BNB Smart Chain networks, utilizing Proof of Stake (PoS) or Proof of Staked Authority (PoSA) consensus mechanisms. This setup ensures the immutability and transparency of FDUSD. Users can also flexibly integrate FDUSD into smart contracts, enabling faster and smoother transactions.

 

>>> More to read : What is USD Coin (USDC)?


FDUSD ADVANTAGES

 

  1. Transferability:

 

FDUSD, as a fungible digital currency, supports seamless and frictionless transactions, making it a convenient choice for various applications.

 

  1. Redeemability:

 

FDUSD is backed by high-quality reserve assets (cash and cash equivalents), allowing holders to redeem their FDUSD tokens for an equivalent amount of USD. This feature ensures the security of the stablecoin’s reserves, with users trusting that FDUSD will always be supported 1:1.

 

  1. Programmability:

 

As a blockchain-based cryptocurrency, one of FDUSD’s significant advantages is its ability to provide cost-effective, low-fee transactions. Unlike traditional financial transactions, which often incur high fees, blockchain-based transactions typically involve lower costs. This cost efficiency makes FDUSD an attractive economic choice for users.

 

  1. Low Fees:

 

FDUSD offers highly cost-effective and low-fee transactions due to its blockchain foundation. This makes it an economical choice compared to traditional financial transactions, which often incur high fees.

 

  1. Operation on Decentralized Networks:

 

As a stablecoin based on blockchain technology, FDUSD operates on decentralized networks distributed across multiple nodes. This enhances transparency, security, and resilience, as no single entity has full control over the network.

 

  1. Independence from Bank Insolvency

 

The fiat reserves backing FDUSD are held in segregated accounts by the designated custodian, First Digital Trust Limited. This means that even in the unlikely event of the custodian’s insolvency, the reserves supporting FDUSD (held by or on behalf of the custodian) remain separate from the custodian’s other assets and are protected, ensuring the stablecoin remains pegged and secure.

 

FDUSD FUTURE

 

FDUSD, while not yet reaching the same level of maturity as more established stablecoins like USDT and USDC, shows significant potential. Its market capitalization growth is a testament to this potential. Recent developments, such as Binance’s decision to phase out BUSD, could positively impact FDUSD‘s adoption.

 

Additionally, FDUSD’s whitepaper outlines a strategic vision that includes building partnerships with various stakeholders. These partnerships aim to enhance accessibility through collaborations with exchanges, encourage merchant adoption through partnerships with payment processors, provide user-friendly wallet solutions, and promote decentralized lending and trading through DeFi projects. This strategic plan indicates the team’s clear objectives, and if they can achieve these goals, particularly with Binance’s support, FDUSD appears to have a promising future.

 

A critical advantage of FDUSD is its USD backing, making it a safer choice compared to algorithmic stablecoins. As long as its reserves are fully backed by cash or cash-equivalent assets, this stability could lead to wider adoption.

 

>>> More to read : Understanding Tether USDT


FAQ

 

  • What is FDUSD ?

FDUSD is a USD-pegged stablecoin launched by Hong Kong digital asset custodian First Digital Trust, currently issued only on the Ethereum and BNB chains.

 

 

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