A quick look at Binance’s newly launched FDUSD: a US dollar stablecoin with a Hong Kong label

Original author: Jiang Haibo
Original source: PANews
On July 26, Binance announced that it would list First Digital USD (FDUSD). For most people, this may be the first time they have heard of this stablecoin project. According to PANews’ observation, FDUSD is a centralized stablecoin similar to USDT and USDC, and there is no room for speculation in the appreciation of governance tokens. In this article, we will briefly introduce FDUSD.
What is FDUSD?
FDUSD is a stablecoin pegged to the U.S. dollar at a ratio of 1:1, issued by FD121 Limited (branded as First Digital Labs), a subsidiary of Hong Kong-based custody company First Digital Limited. First Digital Trust was once the digital asset custodian of Legacy Trust, a Hong Kong financial services company. It was spun off into a completely independent public trust company in 2019. In May 2022, it announced the completion of US$20 million in financing from Telegram investors Nogle and Kenetic Capital. Participate in investment.
According to First Digital, FDUSD is a programmable stablecoin that can execute financial contracts, custody services and insurance without the involvement of third parties. FDUSD was established to reduce volatility in the cryptocurrency market, reduce transaction costs, improve financial efficiency, and provide faster and more secure transactions.
The release of FDUSD was also "coincidentally" launched together with Hong Kong's new virtual asset service provider licensing system on June 1. On June 1 this year, Binance founder CZ announced that First Digital would issue stablecoins on the BNB smart chain. Therefore, FDUSD may have a strong "Hong Kong" label behind it, and may also have support from Binance.
Since this is issued in a centralized manner by traditional financial institutions, there are no governance tokens.
FDUSD Reserves and Audits
According to the description in the white paper, the advantages of FDUSD include: transferable, redeemable, programmable, low fees, running on a decentralized network, and independent of the bankruptcy of banking institutions. The white paper states that FDUSD’s reserves are held by the designated custodian company First Digital Trust Limited. The reserve account and the custodian company's operating account are separate, and even if the custodian company goes bankrupt, FDUSD's reserves will be protected independently of the custodian company's other assets. The project was audited by security firm PeckShield.
First Digital Labs said each 1 FDUSD issued is backed by $1 or its equivalent in assets held by qualified custodians in accounts at regulated depository institutions. FDUSD will issue reserve account reports regularly. The information displayed on the official website shows the reserve reports issued by Prescient Assurance on June 23 and June 30.
The report shows that a total of 532.52 FDUSD was issued on the Ethereum and BNB smart chains on June 23, and a total of 1070.8 FDUSD was issued on the Ethereum and BNB smart chains on June 30. The report said the balance in the reserve account was at least equal to or greater than $532.52 and $1,070.8 on those dates, respectively, but no specific reserve amounts were released.
FDUSD purchase and redemption
First Digital Labs will only offer stablecoins to key industry players, financial intermediaries or professional investors with a certain status, subject to necessary conditions. For retail investors, they can only purchase directly from the secondary market. After being listed on Binance, FDUSD should have sufficient liquidity under non-special circumstances.
In addition, according to previous reports, although the company is headquartered in Hong Kong, FDUSD is temporarily not available to retail investors in Hong Kong because Hong Kong’s stable currency bill has not been officially launched.
To redeem FDUSD, you first need to register as a client of First Digital Labs and meet specific requirements including anti-money laundering (AML) and counter-terrorism financing (CTF) checks, after which the FDUSD can be exchanged for the equivalent value of fiat currency.
The document describing the risk factors also pointed out that due to various factors beyond our control, the price of the stablecoin may fluctuate around $1, and there is no guarantee that the price of the stablecoin will always be equivalent to $1.
On-chain data: The issued amount is 10.11 million, almost all of which are held by Binance addresses
FDUSD has been issued on Ethereum and BNB smart chains. The contract addresses on Ethereum and BNB smart chains are respectively
0xc5f0f7b66764F6ec8C8Dff7BA683102295E16409
0xc5f0f7b66764F6ec8C8Dff7BA683102295E16409
It can be seen from the blockchain browser that as of 13:00 on July 26, the total issuance of FDUSD on the Ethereum and BNB smart chains is approximately 10.11 million. The circulation of FDUSD on Ethereum is 1.114 million, and there are 4 currency-holding addresses, of which Binance 14 holds 99.8565%; the circulation on the BNB smart chain is 8.996 million, and there are also only 4 currency-holding addresses, of which Binance: Hot Wallet 6 holds 99.9992% of the issuance. It can be seen that FDUSD is currently almost entirely held by Binance wallet.
Binance launched a zero-fee event for FDUSD, and first launched three trading pairs: BNB/FDUSD, FDUSD/BUSD, and FDUSD/USDT.
To sum up, FDUSD may be a stable currency anchored to the US dollar issued by a subsidiary of First Digital, a traditional custodian, after Hong Kong’s new virtual asset service provider licensing system comes into effect. Considering Binance’s support for FDUSD and on-chain data, this may be an alternative to the centralized stablecoin that Binance chooses to support after BUSD was banned from being issued by regulators. In the future, Binance may also provide more support, such as listing more trading pairs, participating in Launchpad innovation, etc.
(The above content is excerpted and reprinted with the authorization of our partner PANews, original text link)
Statement: The article only represents the author's personal views and opinions, and does not represent the objective views and positions of the blockchain. All contents and opinions are for reference only and do not constitute investment advice. Investors should make their own decisions and transactions, and the author and Blockchain Client will not be held responsible for any direct or indirect losses caused by investors' transactions.
This article, a quick look at Binance’s newly launched FDUSD: a US dollar stablecoin with a Hong Kong label, first appeared on Blockchain.