- Hong Kong recently introduced a clear legal framework for crypto businesses.
- The new ruling takes action on July 1st, 2023, and seeks to protect retail investors.
- First Digital-owned trust launches the $FDUSD stablecoin on Ethereum and BSC.
The First Digital crypto hedge fund launched a new stablecoin pegged to the United States Dollar. The $FDUSD stablecoin’s reserves are topped with cash, securities, and other “high-quality reserves,” which are regulated according to the new crypto-focused regulatory framework.
The new crypto legislation kicks in on the first summer day, meaning that Hong Kong’s Trust Ordinance requires the new FDUSD stablecoin to hold reserves in separate accounts to prevent the commingling of reserve funds. The stablecoin is compatible with Ethereum (ETH) and Binance Smart Chain (BSC).
A New Home for Fully Regulated Stablecoins?
The new USD-pegged stablecoin will be fully compatible with Binance Smart Chain, according to a fresh tweet by Binance’s CEO Changpeng ‘CZ’ Zhao.
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Binance, the largest crypto exchange globally, had lost an eye-watering $18 billion market cap ever since the U.S. Securities and Exchange Commission (SEC) banned Paxos, the stablecoin issuer, from minting any new $BUSD. Ultimately, the SEC argues that Binance USD (BUSD) was an ‘unregistered security’ without providing any clear framework for its issuance.
Fortunately, Hong Kong’s legal framework is deemed much more coherent by many lawyers and investors on Crypto Twitter. The Hong Kong Monetary Authority (HKMA) and Securities and Futures Commission (SFC) have strict requirements, including a minimum of 12 months of regulatory compliance, before the cryptocurrency can be fully open for public trading.
On the Flipside
- The $FDUSD stablecoin won’t be available for retail traders on launch.
- Hong Kong Monetary Authority is yet to implement rules for this asset class.
Why This Matters
Stablecoin issuance previously lacked a clear-cut legal framework. Hong Kong can lay the foundation for proper stablecoin regulation.
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