- First Digital is launching a new stablecoin tethered to the US dollar but controlled in Asia.
- The stablecoin is programmable and may be used to execute financial transactions, escrow services, and insurance without the need of middlemen.
- The news coincides with introducing of a new regulatory framework for digital assets in Hong Kong.
First Digital, Hong Kong’s foremost certified custodian and registered trust organization, has announced the launch of a new stablecoin, First Digital USD (FDUSD).
The stablecoin, issued by FD121 Ltd (under the brand name First Digital Laboratories), is meant to be backed 1:1 by one US dollar or asset of similar fair value held in the accounts of authorized financial institutions in Asia.
FDUSD provides users with a trustworthy digital currency that aims to reduce volatility in the cryptocurrency market while also improving the efficiency of financial operations by cutting transaction fees and providing quicker, more secure transactions. According to First Digital, the stablecoin is programmable and capable of allowing the execution of financial transactions, escrow services, and insurance without the need for middlemen.
First Digital Labs will collaborate closely with local and international regulatory authorities to ensure full compliance with current and future applicable laws and regulations, and First Digital Labs will contribute to their evolution, including the shaping of any regulatory regimes that FDUSD and/or First Digital may fall under in the near future.
First Digital CEO Vincent Chok stated:
“The launch of this stablecoin represents a major stride forward in our mission to provide a secure and efficient digital currency that can be seamlessly integrated into everyday transactions. Transparency and robust oversight are paramount in building trust in stablecoins and in turn the adoption of this innovative blockchain technology, especially at a time when stability in the traditional financial system is uncertain.”
The FDUSD will be issued by First Digital Trust and will be backed by “high-quality reserves” of cash and cash equivalents in regulated financial institutions across Asia.
The Trust Ordinance of Hong Kong requires all reserves to be kept in separate accounts to avoid asset co-mingling. First Digital Trust is a Hong Kong trust business established under the Trust Law.
One of the primary benefits of the new stablecoins is their redeemability. Since FDUSD is backed by high-quality assets like cash and currency equivalents, users may exchange their FDUSD tokens for an equal amount in US dollars.
This function protects the stablecoin reserves, and consumers may be certain that FDUSD is always 1:1 backed. This demonstrates First Digital’s dedication to operating in a transparent and safe way, giving consumers additional trust and confidence in the stablecoins’ stability and validity.
Hong Kong regulators have said that individual investors should not be able to trade stablecoins publicly until the planned regulations for this asset class are fully adopted in the territory. The news is noteworthy, especially in light of the new Hong Kong “Guidelines for Virtual Asset Trade Platform Operators” that go into effect on June 1.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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