FDUSD will not be used in Hong Kong until its stablecoin regulations are fully in place.
First Digital Group announced the introduction of its USD stablecoin FDUSD. The company, which has its headquarters in Hong Kong, is launching the stablecoin on the Ethereum and BNB blockchains.
Having a coin on multiple blockchains can facilitate better interoperability and broader adoption. It also heightens the chances of gaining access to a wider community and benefiting from each blockchain’s advantages. Lastly, this can also reduce the risk of over-dependence on one blockchain. The company’s plan is to list the coin on all the top exchanges.
The coin is regulated in Asia by reputable bodies to provide oversight and ensure transparent operations. First Digital also stated that the coin is backed by cash and other assets that store up cash, constituting what the company regards as “high-quality reserves” to ensure currency stability.
The First Digital Group is also registered under the Hong Kong Trust, an organization that emphasizes keeping funds in separate accounts to prevent them from mixing with funds meant for other purposes. These measures can help protect their reserves from co-mingling with other funds and constantly provide a clear picture of the company’s financial standing.
First Digital’s CEO, Vincent Chok, expressing his thoughts about the crypto mentioned that:
“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.”
Hong Kong Maintains Its Strict Stablecoin Regulations
With the regulatory imbalances surrounding cryptocurrencies, the coin still has a limit to its use, even in Hong Kong, where First Digital is registered, as the government issued a law against using stablecoins among retail traders. This is because the country’s regulators are still working on classifying the asset for appropriate regulatory oversight.
Additionally, there are certain rules that crypto and stablecoin service issuers are expected to follow to operate locally. Although they are mostly unclear, Hong Kong authorities are working to ensure that stablecoin and crypto transactions and trading are as safe as possible.
In 2023, it is not far-fetched to believe that stablecoins, though expected to be stable, are also susceptible to crashing. A recent example is TerraUSD, a stablecoin that crashed in 2022. The shockwave of the crash shook the crypto world, and many preferred to stay away from crypto entirely. With FDUSD’s introduction, its successful and transparent operation, and favorable Hong Kong regulations for stablecoins, we can expect to see increased adoption of stablecoins since a trusted service will improve investors’ trust. This, at the same time, may also increase the standard for crypto regulations.
