Overview of Binance's newly launched FDUSD: A US dollar stablecoin labeled with Hong Kong
FDUSD has a clear Hong Kong label behind it and may be a BUSD alternative chosen by Binance, currently almost entirely held by Binance wallets.Author: Jiang Haibo, PANews
On July 26, Binance announced the launch of First Digital USD (FDUSD), which may be the first time many people have heard of this stablecoin project. According to PANews observations, FDUSD is a centralized stablecoin similar to USDT and USDC, which means there is no room for speculation on governance token appreciation. This article will provide a brief introduction to FDUSD.
What is FDUSD?
FDUSD is a stablecoin issued by FD121 Limited, a subsidiary of the Hong Kong-based custodian company First Digital Limited, pegged to the US dollar at a 1:1 ratio. First Digital Trust was previously a digital asset custodian under the Hong Kong financial services company Legacy Trust, which spun off into a fully independent public trust company in 2019. In May 2022, it announced the completion of a $20 million financing round, with investments 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 third-party involvement. The establishment of FDUSD aims to reduce volatility in the cryptocurrency market, lower transaction costs, improve financial efficiency, and provide faster and safer transactions.
The release of FDUSD coincidentally launched alongside Hong Kong's new virtual asset service provider licensing regime on June 1. On June 1 of this year, Binance founder CZ announced that First Digital would issue a stablecoin on the BNB Smart Chain. Therefore, FDUSD may have a strong "Hong Kong" label and possibly support from Binance. There have also been reports of FDUSD potentially launching on major exchanges.
Since this is issued in a centralized manner by traditional financial institutions, there is no governance token.
FDUSD's Reserves and Audits
According to the description in the white paper, the advantages of FDUSD include: transferable, redeemable, programmable, low fees, operating on a decentralized network, and independent of bank insolvency. The white paper states that the reserves for FDUSD are held by the designated custodian, First Digital Trust Limited. The reserve accounts and the custodian's operating accounts are separate, ensuring that even if the custodian goes bankrupt, the FDUSD reserves will be protected independently from the custodian's other assets. The project is audited by the security firm PeckShield.
First Digital Labs claims that for every 1 FDUSD issued, there is 1 US dollar or equivalent assets backing it, which are held by qualified custodians in accounts at regulated deposit institutions. FDUSD will regularly issue reserve account reports, and the information displayed on the official website includes reserve reports dated June 23 and June 30 issued by Prescient Assurance.
The reports indicate that as of June 23, a total of 532.52 FDUSD was issued on the Ethereum and BNB Smart Chains, and as of June 30, a total of 1070.8 FDUSD was issued. The reports state that on these two dates, the balance of the reserve account was at least equal to or greater than 532.52 USD and 1070.8 USD, respectively, but the specific reserve amounts were not disclosed.
Purchasing and Redeeming FDUSD
First Digital Labs only sells the stablecoin to key industry participants, financial intermediaries, or professional investors with certain status, and they must meet necessary conditions. Retail investors can only purchase directly from the secondary market. After launching on Binance, FDUSD should also have sufficient liquidity under normal circumstances.
Additionally, according to previous reports, although the company is headquartered in Hong Kong, FDUSD is temporarily unavailable for retail use in Hong Kong due to the stablecoin legislation not being officially launched.
To redeem FDUSD, one must first 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 they can exchange FDUSD for an equivalent amount of fiat currency.
The document describing risk factors also points out that due to various uncontrollable factors, the price of the stablecoin may fluctuate around 1 USD, and there is no guarantee that the price of the stablecoin will always equal 1 USD.
On-chain Data: Issued Amount of 10.11 Million, Almost Entirely Held by Binance Addresses
FDUSD has been issued on the Ethereum and BNB Smart Chains, with contract addresses on Ethereum and BNB Smart Chain being 0xc5f0f7b66764F6ec8C8Dff7BA683102295E16409 and 0xc5f0f7b66764F6ec8C8Dff7BA683102295E16409, respectively.
From the blockchain explorer, as of July 26 at 13:00, the total issuance of FDUSD on Ethereum and BNB Smart Chains is approximately 10.11 million. The issuance on Ethereum is 1.114 million, with 4 holding addresses, of which Binance 14 holds 99.8565%; the issuance on the BNB Smart Chain is 8.996 million, also with only 4 holding addresses, of which Binance: Hot Wallet 6 holds 99.9992% of the issued amount. It can be seen that currently, FDUSD is almost entirely held by Binance wallets.
Binance has launched a zero-fee promotion for FDUSD and has initially listed the trading pairs BNB/FDUSD, FDUSD/BUSD, and FDUSD/USDT.
In summary, FDUSD may be a US dollar-pegged stablecoin issued by the traditional custodian institution First Digital's subsidiary after the new virtual asset service provider licensing regime in Hong Kong takes effect. Considering Binance's support for FDUSD and the on-chain data, this may be a centralized stablecoin alternative that Binance chose to support after the issuance of BUSD was prohibited by regulators. In the future, Binance may also provide more support, such as launching more trading pairs and participating in Launchpad for new projects.
