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Friday, September 29, 2023

Hong Kong Trust Company Launches Programmable Stablecoin FDUSD

Hong Kong-based qualified custodian and trust company, First Digital, is set to launch a new stablecoin, “First Digital USD” (FDUSD), which will be pegged to the U.S. dollar but regulated in Asia.

Stablecoin Backed by Reserves and Programmed for Financial Contracts

FDUSD is designed to maintain a one-to-one peg with the U.S. dollar or an equivalent asset of fair value. According to First Digital, the stablecoin’s reserves will be held in segregated accounts at institutions based in Asia. The programmable nature of the stablecoin enables the execution of financial contracts, escrow services, and insurance without the need for intermediaries.

Compliance and Regulatory Collaboration

First Digital Labs, the company’s innovation arm, expressed its commitment to ensuring full compliance with current and future applicable laws and regulations. The company intends to work closely with local and overseas regulatory authorities, actively participating in shaping regulatory regimes that may govern FDUSD and First Digital in the future.

Stability, Remittance, and Hedging

Stablecoins, such as FDUSD, offer increased stability, facilitate remittance services, and act as a hedge against central bank policies aimed at influencing domestic currencies, according to First Digital.

Hong Kong’s Evolving Regulatory Landscape

The announcement comes at a significant time, coinciding with the upcoming enforcement of Hong Kong’s “Guidelines for Virtual Asset Trading Platform Operators” on June 1. These guidelines outline regulations related to asset custody, client asset segregation, conflict of interest avoidance, and cybersecurity standards set by the country’s Securities and Futures Commission.

Global Competition and Regulatory Uncertainty

Amid regulatory uncertainty in the United States, some industry players warn that the country risks losing its leadership position in the crypto sector as businesses seek friendlier jurisdictions abroad. Coinbase CEO Brian Armstrong noted Hong Kong’s positioning as a new crypto hub, highlighting the potential shift of industry focus away from the United States.

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