Hong Kong-based First Digital Group has announced the introduction of a new stablecoin that will be pegged to the United States Dollar but regulated in Asia.
The announcement comes shortly after Hong Kong announced the introduction of a new regulatory framework for digital assets in its jurisdiction.
The new stablecoin christened the “First Digital USD” or FDUSD, is intended to be backed on a 1:1 basis with the USD or an asset of equivalent fair value. First Digital also added that the reserves backing the stablecoin would be held in segregated accounts at different institutions in Asia. This is to prevent the co-mingling of assets. The FDUSD stablecoin will be backed by “high-quality reserves” and issued by the First Digital Trust, a trust company registered under Hong Kong’s Trust ordinance. The stablecoin has been issued on BNB and Ethereum, with the company in discussions with major exchanges for a listing. First Digital, in its statement, added,
“First Digital Labs will work closely with local and overseas regulatory authorities to ensure full compliance with current and future applicable laws and regulations, and First Digital Labs will participate in the shaping of their evolution, including the shaping of any regulatory regimes that FDUSD and/or First Digital may fall under in the foreseeable future. Stablecoins provide increased stability, a form of remittance, a hedge against central bank policymakers who seek to influence their domestic currencies.”
The CEO of First Digital, Vincent Chok, stated that the launch represented a major stride forward in providing an efficient and secure digital currency integrated into transactions.
“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 Enacts GuidelinesThe announcement comes at a time when Hong Kong’s “Guidelines for Virtual Asset Trading Platform Operators” that are becoming effective on the 1st of June 2023. The new rules define clear standards for the safe custody of assets, avoidance of conflict of interest, segregation of client assets, and cybersecurity standards that are expected from licensed trading platforms.
“Providing clear regulatory expectations is the key to fostering responsible development. Hong Kong’s comprehensive virtual assets regulatory framework follows the principle of ‘same business, same risks, same rules’ and aims to provide robust investor protection and manage key risks. This will enable the industry to develop sustainably and support innovation.”
The Securities and Futures Commission (SFC) will also provide additional guidance on the new regulatory requirements and other implementation details, such as license application procedures and information about transitional arrangements. Regulators in Hong Kong have stated that stablecoins should not be allowed for trading by investors until the proposed rules for the asset class are implemented in its jurisdiction.
Regulatory Uncertainty In The US ContinuesMeanwhile, regulatory uncertainty in the United States is continuing and has pushed major players to warn regulators that it could lose its position as a leader in the sector. The warning comes as many firms in the country are weighing their options and looking to shift to friendlier jurisdictions. According to Brian Armstrong, Coinbase CEO, with the regulatory uncertainty in the US, it was not surprising that Hong Kong was positioning itself as a crypto hub.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
