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(Kitco News) - Stablecoins continue to be one of the preferred routes of entry into the digital asset ecosystem as the past week has seen the launch of a U.S.-dollar-backed stablecoin in the Hong Kong market and the launch of an on-chain bond backed by the EUROe, the only EU-regulated stablecoin.
According to a press release from First Digital, a qualified custodian and registered trust company based out of Hong Kong, the firm has launched First Digital USD (FDUSD), a stablecoin “backed on a 1:1 basis by one U.S. dollar or asset of equivalent fair value, held in accounts of regulated financial institutions in Asia.”
FDUSD is a programmable stablecoin, capable of enabling the execution of financial contracts, escrow services, and insurance without intermediaries.
The new stablecoin will be issued by FD121 Limited, a subsidiary of First Digital Limited, and will offer users “a reliable digital currency aimed at reducing volatility in the cryptocurrency market, enhancing the efficiency of financial transactions by lowering transaction costs, and offering faster, more secure transactions,” the release said.
As a trust company registered under the Trustee Ordinance (Cap. 29, Laws of Hong Kong), First Digital Trust Limited is mandated to hold all FDUSD reserves in cash or highly liquid assets that are stored in segregated accounts in order to prevent the co-mingling of FDUSD reserves with other assets of First Digital Trust Limited.
“This structure ensures that holders of FDUSD can remain confident in the 1:1 backing of the tokens and the ability to redeem their stablecoins,” First Digital said. “FDUSD is backed by high-quality reserves- cash and cash equivalents, meaning that users can redeem their FDUSD tokens for their equivalent value in U.S. dollars.”
“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,” said Vincent Chok, CEO of First Digital. “Transparency and robust oversight are paramount in building trust in stablecoins and in turn the adoption of this innovative blockchain technology, especially at a time when stability in the traditional financial system is uncertain. First Digital is fully committed to regulatory compliance to set a new standard for legitimacy in the space.”
First Digital Labs said that it plans to work closely with local and overseas regulatory authorities to ensure full compliance with current and future applicable laws and regulations, and will take an active role in shaping the development of “any regulatory regimes that FDUSD and/or First Digital may fall under in the foreseeable future.”
“By fostering a collaborative relationship with governmental bodies and financial institutions at home and abroad, we hope to establish a new standard for stability and trust in the digital currency space,” the firm said.
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| Visa is now hiring engineers to develop a stablecoin payment system |
Euro stablecoin used to launch olive-oil-backed bonds
French agricultural firm Lamar Olive Oil announced that it has successfully issued an on-chain bond using Obligate, a Switzerland-based decentralized finance (DeFi) platform, representing a notable development in the application of cryptocurrency in business financing models.
Obligate is a Polygon-based protocol that helps provide small and medium-sized enterprises with a safe and transparent way of issuing, tracking and settling debt.
Blockchain-based bonds on Obligate utilize smart contracts to replace the role of the issuer and paying agent in the settlement layer of traditional bond issuance. This helps lower the thresholds to issue bonds, allowing companies in developing and emerging markets to gain increased access to funding.
The new bond is the first issuance to be denominated in Membrane Finance’s EUROe, the only EU-regulated crypto stablecoin, which launched in February. “EUROe enables transparent and near-instant payments around the world at near-zero cost,” the press release for EUROe said. “As a result, individuals, businesses, and governments can use EUROe while avoiding the risks and complexities of converting and paying in volatile cryptocurrencies.”
Credora, Obligate’s credit rating partner, handled the process of underwriting and structuring the bond, conducted the credit evaluation, and will supply ongoing risk monitoring.
