Binance announced that it will list First Digital USD (FDUSD). For most people, this may be the first time they have heard of this stable currency project.
According to observations, FDUSD is a centralized stablecoin similar to USDT and USDC, so there is no room for speculation on the appreciation of governance tokens. In this article, we will briefly introduce FDUSD.
FDUSD is a stablecoin pegged 1:1 to the U.S. dollar issued by FD121 Limited (brand name First Digital Labs), a subsidiary of Hong Kong-based custodian company First Digital Limited.
First Digital Trust was once a digital asset custody institution of Hong Kong financial services company Legacy Trust. It was spun off into a completely independent public trust company in 2019. In May 2022, it announced the completion of financing of US$20 million, with participation from Telegram investors Nogle and Kenetic Capital.
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 safer transactions.
The release of FDUSD also coincidentally launched on June 1 together with Hong Kong’s new licensing system for virtual asset service providers.
On June 1 this year, Binance founder CZ announced that First Digital will issue stablecoins on the BNB smart chain. Therefore, FDUSD may have a strong Hong Kong label behind it, and it may also have the support of Binance. There was even news that FDUSD may be listed on major exchanges before.
Since this is issued by traditional financial institutions in a centralized manner, there is no governance token.
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 from the bankruptcy of banking institutions.
According to the white paper, the reserves of FDUSD are kept by the designated custodian company First Digital Trust Limited.
The reserve account and the operating account of the custodian company are separated. Even if the custodian company goes bankrupt, the reserve fund of FDUSD will be protected independently of other assets of the custodian company. The project was audited by security firm PeckShield.
First Digital Labs stated that every 1 FDUSD issued is backed by 1 dollar or equivalent assets, and these assets are kept in the accounts of regulated depository institutions by qualified custodians.
FDUSD will regularly issue reserve account reports, and 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 ETH 0.42% and BNB smart chains on June 23, and a total of 1070.8 FDUSD were issued on June 30 on the Ethereum and BNB smart chains.
On these two dates, the reserve account balances were at least equal to or greater than $532.52 and $1,070.8, respectively, the report said, without disclosing the exact amount of the reserve.
First Digital Labs only sells stablecoins to key industry players, financial intermediaries or professional investors with a certain status, and must meet the necessary conditions. For retail investors, they can only buy directly from the secondary market. After listing on Binance, FDUSD should also have sufficient liquidity under non-special circumstances.
In addition, according to previous reports, although the company is headquartered in Hong Kong, because Hong Kong’s stable currency bill has not been officially launched, FDUSD is temporarily unavailable to retail investors in Hong Kong.
To redeem FDUSD, you first need to register as a First Digital Labs customer, meet certain requirements including Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) checks, and then convert FDUSD to an equivalent amount of fiat currency.
In the document describing the risk factors, it is also pointed out that due to various uncontrollable factors, the price of stable currency may fluctuate around $1, and there is no guarantee that the price of stable currency will always be equivalent to $1.
On-chain data: 10.11 million issued volume, almost all held by Binance addresses
FDUSD has been issued on the Ethereum and BNB smart chains. The contract addresses on the Ethereum and BNB smart chains are 0xc5f0f7b66764F6ec8C8Dff7BA683102295E16409 and 0xc5f0f7b66764F6ec8C8Dff7BA683102295E16409 respectively.
It can be seen from the blockchain browser that the total circulation of FDUSD on the Ethereum and BNB smart chains is about 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 only 4 currency-holding addresses, of which Binance: Hot Wallet 6 holds 99.9992% of the circulation. It can be seen that almost all FDUSD is currently 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 USD-pegged stablecoin 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 a centralized stablecoin alternative that Binance chose to support after BUSD was banned from issuing by regulators. In the future, Binance may also provide more support, such as launching more trading pairs, participating in launching new launches on Launchpool, etc.
