CoinClear

First Digital USD (FDUSD)

5.0/10

Binance's preferred fiat-backed stablecoin — rapid growth fueled by exchange incentives but heavily concentrated and less transparent than USDC.

Updated: February 16, 2026AI Model: claude-4-opusVersion 1

Overview

First Digital USD (FDUSD) launched in June 2023, issued by First Digital Labs, a subsidiary of First Digital Group — a Hong Kong-based financial technology company. FDUSD was designed as a fiat-backed, 1:1 USD-pegged stablecoin targeting the Asian market. The stablecoin gained rapid traction primarily through its partnership with Binance, the world's largest cryptocurrency exchange, which promoted FDUSD with zero-fee trading pairs and incentive programs.

Following the regulatory pressures on BUSD (Paxos was ordered to stop minting BUSD by the NYDFS in February 2023), Binance needed a replacement fiat-backed stablecoin. FDUSD filled that role, growing from zero to a multi-billion dollar market cap within months. As of early 2026, FDUSD has a market cap of approximately $2-4 billion, though this fluctuates significantly based on Binance's promotional activities.

The stablecoin operates on a standard mint/redeem model: verified participants deposit USD with First Digital Trust (a licensed trust company in Hong Kong), and FDUSD is minted in return. Reserves are reportedly held in cash and cash equivalents, primarily U.S. Treasury bills. FDUSD is issued on Ethereum and BNB Chain.

Peg Stability

Historical Performance

FDUSD has generally maintained a stable peg since launch, trading within $0.998-$1.002 on Binance. The peg benefits from Binance's massive trading volume — tight spreads on Binance's FDUSD pairs help maintain price stability. However, FDUSD has shown more peg variance on other exchanges and in DeFi pools where liquidity is thinner. Brief depegs to $0.995-$0.997 have occurred during periods of market stress or when Binance adjusted promotional programs.

Mechanism

FDUSD's peg is maintained through the standard mint/redeem mechanism for authorized participants, supplemented by Binance's market-making activity and zero-fee trading incentives. The tight Binance integration provides a powerful peg maintenance tool — when FDUSD drifts, Binance's deep liquidity quickly corrects it. However, this reliance on a single exchange for peg stability is a concentration risk.

Stress Testing

FDUSD has not been tested in a severe market stress scenario. Its rapid growth occurred during a relatively favorable market period (2023-2025 bull market). The stablecoin's peg stability during a major market crash or a Binance-specific crisis (regulatory action, hack, outage) remains untested. Given that the majority of FDUSD liquidity exists on Binance, a Binance disruption could cause severe peg deviation.

Collateralization

Reserve Composition

First Digital Labs reports that FDUSD is fully backed by cash and cash equivalents, including U.S. Treasury bills and fixed deposits at recognized financial institutions. The reserve composition is similar in nature to USDC — high-quality liquid assets — though with less detail provided about specific allocations and custodial arrangements.

Transparency

FDUSD's transparency is moderate. First Digital Labs publishes monthly attestation reports from an independent auditor (Prescient Assurance), confirming that the value of reserve assets equals or exceeds the FDUSD in circulation. However, these attestations provide less detail than Circle's USDC reports, and Prescient Assurance is a smaller firm compared to Deloitte. The attestation framework and frequency are reasonable but not best-in-class.

Over/Under Collateralization

FDUSD operates at approximately 1:1 collateralization based on attestation reports, with reserves marginally exceeding liabilities. There is no significant overcollateralization buffer. The reserve yield (from T-bills) accrues to First Digital Labs rather than FDUSD holders.

Security

Smart Contract Security

FDUSD's smart contracts on Ethereum and BNB Chain are relatively standard ERC-20/BEP-20 implementations with admin controls for minting, burning, pausing, and blacklisting. The contracts have been audited by PeckShield. As with other centralized stablecoins, the admin key architecture means First Digital Labs has full control over token operations. The contracts are not particularly complex, which limits exploit surface area.

Custodian Risk

FDUSD's reserves are held through First Digital Trust, a licensed trust company in Hong Kong regulated by the Hong Kong Companies Registry (not by the Hong Kong Monetary Authority or SFC). The custodial and banking arrangements are less transparent than USDC's setup with BNY Mellon and BlackRock. Hong Kong's regulatory framework for stablecoin issuers is evolving, and the regulatory status of First Digital Trust may change as new rules are implemented.

Operational Security

Limited information is publicly available about First Digital Labs' operational security practices, key management procedures, or incident response capabilities. The company is relatively new and has not been tested by major security incidents. The opaque operational setup is a concern compared to more established issuers.

Decentralization

Governance

FDUSD is fully centralized under First Digital Labs' control. There is no governance token, no DAO, and no community input into protocol decisions. The stablecoin's fate is tied to the decisions of a single Hong Kong-based company and its relationship with Binance.

Censorship Resistance

FDUSD has blacklisting and freeze capabilities built into its smart contracts, similar to USDT and USDC. First Digital Labs can freeze any address at its discretion or upon regulatory/law enforcement request. Given its Hong Kong jurisdiction, FDUSD is subject to both Hong Kong and potentially Chinese regulatory influence, which could affect censorship decisions.

Regulatory Exposure

Hong Kong has been developing a comprehensive regulatory framework for stablecoin issuers, with licensing requirements expected to be fully implemented. First Digital Labs will need to comply with these evolving requirements. The Hong Kong jurisdiction provides some regulatory clarity compared to BVI (Tether) but also means the stablecoin is subject to Hong Kong and potentially PRC-influenced regulatory decisions. The relationship with Binance — itself a frequent target of global regulators — adds another layer of regulatory risk.

Adoption

Market Cap & Velocity

FDUSD's market cap of ~$2-4 billion fluctuates with Binance's promotional activities. When Binance offers zero-fee FDUSD trading pairs, the supply and usage spike; when promotions are reduced, market cap contracts. This promotional dependency makes FDUSD's adoption somewhat artificial. On-chain transfer volumes outside of Binance are relatively modest.

DeFi Integrations

FDUSD has limited DeFi presence compared to USDT, USDC, or DAI. While it's available on some DeFi protocols (PancakeSwap on BNB Chain, some Ethereum DEXes), the vast majority of FDUSD activity occurs on Binance. The stablecoin has not established itself as a meaningful DeFi collateral asset or trading pair outside of the Binance ecosystem.

Cross-Chain Presence

FDUSD is available on Ethereum and BNB Chain. Cross-chain availability is limited compared to USDT or USDC. The dual-chain approach covers significant market territory (Ethereum for DeFi, BNB Chain for Binance ecosystem) but lacks the broad multi-chain presence of more established stablecoins.

Risk Factors

  • Binance concentration: The majority of FDUSD liquidity and usage is on Binance; a Binance disruption would severely impact FDUSD.
  • Issuer track record: First Digital Labs is a relatively new entity without a long operating history.
  • Regulatory uncertainty: Hong Kong's stablecoin regulatory framework is still evolving, creating compliance uncertainty.
  • Promotional dependency: FDUSD's market cap growth has been driven by Binance incentives rather than organic demand.
  • Limited transparency: Attestation reports provide less detail and use a less recognized auditor than USDC.
  • Geopolitical risk: Hong Kong-based issuance creates exposure to PRC regulatory influence and geopolitical tensions.

Conclusion

FDUSD has achieved rapid growth by filling the void left by BUSD's forced wind-down and leveraging Binance's massive distribution network. For Binance traders, FDUSD serves as a functional fiat-backed stablecoin with reasonable reserve backing. The stablecoin benefits from Binance's deep liquidity and zero-fee promotions.

However, FDUSD's proposition outside of the Binance ecosystem is weak. Its DeFi presence is minimal, its transparency is below USDC's standard, and its adoption is heavily dependent on Binance's promotional activities. The concentration on a single exchange — particularly one that faces ongoing global regulatory scrutiny — represents a significant risk factor.

The score of 5.0 reflects FDUSD's adequate but unremarkable performance across most dimensions. It is a functional fiat-backed stablecoin for Binance users but lacks the transparency of USDC, the liquidity of USDT, or the decentralization of DAI. FDUSD's long-term viability depends on First Digital Labs building credibility beyond the Binance relationship and Hong Kong establishing a clear, stable regulatory framework for stablecoin issuers.

Sources