Benzinga - First Digital, a Hong Kong-based trust company and authorized custodian, announced the introduction of its new U.S. dollar-pegged stablecoin, which will be governed by regulations in Asia.
What Happened: The stablecoin, named First Digital USD or FDUSD, is planned to be fully backed by U.S. dollars or assets of equal fair value, The Block reported from the company's statement.
First Digital noted the reserves backing the stablecoin would be maintained in segregated accounts at various institutions located within Asia.
Apart from maintaining its value stability, FDUSD is designed to be programmable, enabling the implementation of financial contracts, insurance and escrow services without the need for intermediaries, stated First Digital.
"First Digital Labs is dedicated to maintaining a close working relationship with both local and international regulatory bodies to ensure complete compliance with all present and future relevant laws and regulations," the company said.
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First Digital also expressed its intention to actively contribute to the evolution of these regulatory regimes, including those that may influence FDUSD and the company itself in the future.
"Stablecoins offer stability, a remittance method, and a safeguard against central bank policies that might manipulate domestic currencies," the company further emphasized.
Why It Matters: This development is especially noteworthy given the forthcoming "Guidelines for Virtual Asset Trading Platform Operators" in Hong Kong, which are set to take effect on June 1.
The new regulations will mandate safe asset custody, segregation of client assets, conflict of interest avoidance and the maintenance of cybersecurity standards, as per the city's Securities and Futures Commission.
Meanwhile, uncertainty in the U.S. regarding regulatory oversight is leading some sector leaders to caution that the country may forfeit its leadership position in the crypto industry as operations are moved to more hospitable jurisdictions.
Coinbase Global Inc (NASDAQ: COIN) CEO Brian Armstrong wasn't taken aback by Hong Kong's emergence as a new hub for crypto, stating on Tuesday that it was "no surprise."
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