What is FDUSD? How it works, what are the risks, and how to buy [Explanation for beginners]

Cryptocurrency Information Bureau | Currency Introduction | Are you looking for a stable asset? FDUSD is a US dollar-linked stablecoin. A thorough explanation of the mechanism, risks, and future prospects! #FDUSD #Stablecoin #Cryptocurrency

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Video explanation

What is FDUSD (First Digital USD)? Basic information and future prospects that even beginners can understand

Hello, I'm John, a cryptocurrency blogger. Today, I would like to explain the recently popular "First Digital USD," or FDUSD for short, in an easy-to-understand way even for those who are new to cryptocurrencies. Unlike cryptocurrencies such as Bitcoin and Ethereum, whose prices fluctuate greatly, FDUSD is classified as a "stable coin." As the name suggests, a stable coin is a coin with a stable price, and many are designed to be linked in value to fiat currencies (money issued by a country) such as the US dollar. FDUSD is also managed with the aim of making 1 FDUSD approximately equal to 1 US dollar.

So why do we need such stable coins? The world of virtual currencies is an exciting place where new technologies and ideas are constantly being born, but on the other hand, the large price fluctuations are also a source of concern. For example, when trying to buy something with virtual currency or send money to someone, it would be a problem if the value changed drastically in just a few hours. Stable coins like FDUSD were created to solve these problems. Because their prices are stable, they are easy to use as a means of payment and act as a "safe harbor" to temporarily evacuate assets in the active virtual currency market.

FDUSD is issued by a Hong Kong-based group of companies called "First Digital" (including First Digital Trust and First Digital Labs). The main feature of this coin is that its value is backed by actual assets such as US dollars equivalent to the amount of the issued FDUSD, or US Treasury bills (short-term bonds issued by the US government, considered to be highly safe assets), bank deposits, and reserve repos (a form of short-term financing). This makes it easier for users to trust that "this FDUSD is worth exactly $1" (Source: MyEtherWallet Blog). First Digital also claims to comply with regulations and emphasize transparency (Source: Helius.dev Blog).

FDUSD Supply and Price Impact

When considering the price of virtual currency, "supply" is a very important factor. Supply indicates how many coins are in circulation on the market. In the case of stable coins such as FDUSD, the concept of supply is slightly different from that of Bitcoin.

FDUSD does not have a strict "maximum supply" (the maximum number that can be issued) like Bitcoin. Instead, the supply of FDUSD fluctuates according to market demand and the amount of reserves. In other words, if many people want FDUSD and deposit corresponding assets such as US dollars to newly issue FDUSD (this is called "minting"), the supply will increase. Conversely, if more people want to convert FDUSD back to US dollars and FDUSD is redeemed (this is called "burning"), the supply will decrease. This mechanism is intended to stabilize the price of FDUSD at around $1.

According to information as of June 2025, the market capitalization of FDUSD (the total value of coins on the market) has reached approximately 6 billion US dollars (more than 15.1 billion yen in Japanese yen), and it is actively traded, with 2300-hour trading volume reaching several billion US dollars (source: Binance). The price is not always exactly 24 dollar, but fluctuates slightly depending on market conditions. For example, the most recent data shows that 1 FDUSD is often traded at around 1 US dollars (source: Gate.com, Binance, Bitget). This is within the general range of movement for a stable coin. However, as will be mentioned in the risk section below, there have been cases in the past where the price temporarily deviated significantly from 0.998 dollar, a phenomenon known as "depegging."

As long as the supply is properly managed and balanced with the reserve, FDUSD will be able to maintain its value. On the other hand, if confidence is shaken for some reason and many people try to sell FDUSD at the same time, there is a non-zero risk that the supply will be oversupplied and the price will fall below $1.

The technology behind FDUSD: Blockchain and its mechanisms

FDUSD is issued and managed based on a technology called "blockchain." Blockchain may sound complicated, but in simple terms, it is like a database (digital ledger) that links transaction records like a chain and shares and manages them for everyone. Thanks to this technology, a major feature is that transactions can be recorded in a highly transparent and tamper-resistant manner, even without a central administrator.

FDUSD is issued not only on a specific blockchain, but also on multiple major blockchains such as Ethereum and BNB Chain. This allows users to handle FDUSD in their own easy-to-use blockchain environment. For example, FDUSD issued on Ethereum complies with the standard "ERC-20 token" and can be used in many wallets (cryptocurrency wallets) and DeFi (decentralized finance) services.

The most important technical feature of FDUSD is its "value backing mechanism." As mentioned earlier, FDUSD is said to be backed 1:1 by "reserves" such as US dollars, US Treasury bills, bank deposits, and reserve repos held by the issuer, First Digital (Source: MyEtherWallet Blog). In theory, to issue 1 FDUSD, assets equivalent to 1 US dollar are secured as reserves. The status of this reserve is to be periodically published through attestation by an independent auditing firm, which is expected to ensure transparency and reliability. However, there have been concerns in the market in the past about the accuracy of this attestation and the issuer's ability to pay (more on this later).

In summary, FDUSD is:

Blockchain technology:Ensures transparency and security of transactions.
Multi-chain support: Can be used on multiple blockchains.
Reserve-backed: The core mechanism for maintaining the US dollar peg (1FDUSD ≒ 1 US dollar).

It can be said that it has a technical background such as

FDUSD Issuer and Community

FDUSD is issued by a group of companies called "First Digital." Specifically, it involves Hong Kong-based trust company "First Digital Trust Limited" and its affiliate "FD121 Limited (operating under the brand name of First Digital Labs)." The First Digital Group holds a Trust or Company Service Provider (TCSP) license in Hong Kong and emphasizes that it operates in a regulated environment (Source: Helius.dev Blog).

The credibility of the issuer is very important for stablecoins. Because the promise that the value of FDUSD is backed by reserves is only valid if the issuer properly manages its reserves and has the ability and will to redeem FDUSD for US dollars at any time. First Digital claims to be publishing regular audit reports to increase the transparency of its reserves. For example, it is reported that the reserves as of March 2025, 3 consist of US Treasury bills, cash, bank deposits, and reserve repos (Source: MyEtherWallet Blog).

However, in the past, rumors about First Digital's solvency spread, causing the price of FDUSD to temporarily drop significantly (depegging) (Source: Decrypt, blog.amberdata.io). In response, First Digital executives (e.g. Vincent Chok) strongly denied this through social media, saying that "FDUSD is fully backed and there is no problem with solvency" (Source: X.com @vchok, TronWeekly). Binance, a major cryptocurrency exchange, has also commented on the accuracy of FDUSD's reserve proof and tried to allay market concerns (Source: defi-planet.com).

As for community activities, FDUSD is a relatively new stablecoin, and is therefore different from the huge decentralized communities of Bitcoin and Ethereum. Information is mainly disseminated from First Digital's official website, social media accounts, and affiliated exchanges. Due to the nature of stablecoins, there is a tendency to place more emphasis on spreading user trust and adoption than on the technical development community.

How FDUSD can be used and its future potential

USD-pegged stablecoins like FDUSD have many uses in the crypto world. Let’s look at some of the main ones.

Hedge against price fluctuation risk: Since the prices of virtual currencies such as Bitcoin fluctuate greatly, you can stabilize the value of your assets by temporarily exchanging them for FDUSD when you want to lock in profits or when the market is unstable.
Base currency of virtual currency exchanges: Many cryptocurrency exchanges allow you to use USD stablecoins to buy and sell other cryptocurrencies. FDUSD is also used as the base currency for trading pairs, especially on Binance.
Use in DeFi (Decentralized Finance): DeFi is a mechanism that allows financial transactions (lending, borrowing, exchanging, etc.) without going through a bank, etc. You can deposit FDUSD in a DeFi protocol to earn interest (lending) or use it as collateral when borrowing other virtual currencies.
International remittance and payment: Compared to traditional bank transfers, it has the potential to make cross-border remittances faster and with lower fees. It is expected to be particularly convenient for transactions with US dollar economies.
E-commerce and online service payments: In the future, more online shops and services may start accepting stable-value FDUSD as a form of payment.

The future of FDUSD depends on how First Digital can increase its credibility and expand its use cases, along with the growth of the stablecoin market as a whole. In the highly competitive stablecoin market, FDUSD is trying to establish itself as a trustworthy stablecoin, using its "regulatory compliance" and "transparency" as its weapons (source: Analytics Insight). First Digital is exploring new business opportunities through FDUSD, and is trying to play a part in shaping the future of stablecoins as more new entrants to the market come forward (source: DigFin).

However, regulations on stable coins are becoming stronger in countries around the world, and it is necessary to take into consideration the possibility that future regulatory trends may affect the spread and operation of FDUSD.

What makes FDUSD different from other stable coins? Strengths of FDUSD

There are many strong rivals in the stablecoin market, such as USDT (Tether) and USDC (USD Coin). What are FDUSD's strengths in this environment?

The main strengths of FDUSD are:

Focus on reserve transparencyFDUSD emphasizes that its reserves are made up of “cash and cash equivalents,” specifically high-quality assets such as U.S. Treasury bills, bank deposits, and reserve repos (Source: MyEtherWallet Blog), in an attempt to avoid the past doubts over USDT’s reserve composition and increase its credibility.
Regulatory compliance awareness：The issuer is a trust company licensed by the Hong Kong regulatory authorities, showing its commitment to operating in compliance with regulations (Source: Helius.dev Blog). This is an important point, especially in the current cryptocurrency industry where regulations are becoming increasingly strict.
Partnership with major exchanges: In particular, Binance, one of the world's largest cryptocurrency exchanges, actively supports FDUSD and provides and promotes trading pairs. This increases liquidity (ease of trading) and makes it easier for users to access.
Programmable Reimbursement: FDUSD is said to be redeemable 1:1 by the underlying assets (mainly US dollars). This gives users the peace of mind that they can convert FDUSD back to fiat currency at any time.

On the other hand, since FDUSD is a relatively new stablecoin, it still lags behind leading stablecoins such as USDT and USDC in terms of market track record, adoption, and circulation. Also, as described below, it has experienced issues with price stability (pegging) in the past.

It is important for users to comprehensively compare these strengths with the fact that it is still a new coin and choose the stablecoin that best suits their needs.

Risks and precautions when using FDUSD

FDUSD is a stable coin that aims for price stability, but there are also risks and precautions you should be aware of when using it. Understanding these is very important in order to safely use virtual currencies.

Depegging risk (price deviation risk): FDUSD is designed to be pegged to 1 US dollar, but it is not guaranteed that it will always be able to maintain exactly 1 dollar. The price may de-peg significantly from 1 dollar due to various factors such as sudden changes in the supply and demand balance in the market, concerns about the reliability of the issuer, and system failures. In fact, it has been reported that the price of FDUSD temporarily fell to about 2025 dollars (source: blog.amberdata.io) and about 0.76 dollars (source: altcoinbuzz.io) when rumors about the issuer's ability to pay circulated around the beginning of 0.87. The price has since recovered, but such risks always exist.
Issuer credit risk: The value of FDUSD is secured by the reserves held by the issuer, First Digital. If the issuer goes bankrupt or manages the reserves improperly, FDUSD may lose value. Past rumors about solvency (source: Decrypt, blog.amberdata.io) are evidence that this risk is conscious in the market. First Digital denies this and claims that the reserves are safe (source: TronWeekly, X.com @vchok).
Regulatory Risk：Regulations on stable coins are currently being developed in various countries around the world. If new regulations are introduced in the future, this may affect the operation and use of FDUSD. In particular, attention should be paid to regulatory trends in Hong Kong, where the issuer is based, and in major trading markets.
Counterparty Risk: If you deposit FDUSD in an exchange or DeFi platform, there is a risk that those businesses will be hacked or go bankrupt. This is not a risk specific to FDUSD, but it is a point of caution that applies to virtual currencies in general.
Security risk: If you store FDUSD in your wallet individually, there is a risk that your private key may be stolen due to phishing scams or malware infection, and you may lose your assets. Be sure to take security measures.
Information asymmetry: It may be difficult for the public to always obtain up-to-date and complete information on detailed audit reports and management status of reserves. Issuers' efforts at transparency are important, but it is important to understand that there are limitations.

It is necessary to carefully consider whether or not to use FDUSD after understanding these risks.

What do the experts think? FDUSD rating

Let's take a look at what experts and analytical platforms say about FDUSD from several sources.

About price predictions :
- A price forecast from major exchange Gate.com (as of April 2025, 4) estimates that FDUSD will achieve an average price of $17 in 2025, with a possible high of $0.998 and a low of $1.17 (Source: Gate.com Price Prediction). Predictions of stablecoins significantly exceeding $0.9381 are unusual, but may reflect short-term market volatility.
- According to Binance's price forecast (as of June 2025, 6), the value of FDUSD could rise by +9% by 2030, reaching $5. The price in 1.274291 is predicted to be $2025 (Source: Binance Price Prediction). This long-term upward projection may be an expectation that FDUSD will have more value and utility than just a pegged currency, but should be interpreted with caution given the fundamental nature of stablecoins (pegged to $0.99844).
Reliability and Reserves :
- MyEtherWallet's blog (as of May 2025, 5) states, "As of March 12, 2025, FDUSD's reserves consist of U.S. Treasury bills, cash, bank deposits, and reserve repos. This one-to-one backing ensures reliability and authenticity." (Source: MyEtherWallet Blog)
Market position and potential :
- An article by Analytics Insight (as of May 2025, 5) states that "FDUSD strengthens its position as a trusted stablecoin with its excellent security protocols and regulatory compliance" (source: Analytics Insight).
- The Helius.dev blog (as of May 2025, 5) describes FDUSD as a “fiat-collateralized stablecoin issued by First Digital Labs, regulated in Hong Kong, with a focus on compliance and transparency” (Source: Helius.dev Blog).

While these opinions appreciate the FDUSD’s emphasis on reserve transparency and regulatory compliance, they also suggest that price predictions should be carefully considered in light of the characteristics of stablecoins. In particular, it is important to note that price predictions are merely an analysis and do not guarantee the future.

FDUSD Latest Updates and Future Developments

The situation surrounding FDUSD is changing daily. Here we will touch on the main recent news and future prospects.

Recent highlights:

Depegging and Recovery: In early 2025, FDUSD temporarily fell well below $1 USD following rumors (including claims by Tron founder Justin Sun) about the solvency of its issuer, First Digital. Some reports say it fell to $0.76 (source: blog.amberdata.io) or $0.8726 (source: altcoinbuzz.io). However, the price gradually recovered to nearly $1 USD after First Digital denied the allegations and claimed that the reserves were fully backed (source: X.com @vchok, TronWeekly) and major exchange Binance responded to market concerns about the accuracy of FDUSD's reserve proof (source: defi-planet.com). This series of turmoil was an example of the reliability of stablecoins and the speed of market reaction.
Reserve Transparency DebateThe depegging scandal has raised concerns about the transparency of FDUSD’s reserve structure and audits. First Digital has reiterated that the reserves are made up of US Treasury bills and cash (Source: MyEtherWallet Blog).
Expanded handling at major exchanges: Binance actively supports FDUSD and promotes its use through free trading fee campaigns, etc. Collaboration with such major exchanges contributes to increasing the liquidity and awareness of FDUSD.

Future developments and roadmap:

We will have to wait for an official announcement from First Digital regarding the specific long-term roadmap (development plan) of FDUSD, but in general, stablecoin issuers are expected to focus on the following:

Further transparency: Increase the frequency and detail of reserve audit reports to strengthen market confidence.
Expanding supported blockchains: To increase user convenience by supporting more blockchains.
Expanding use cases: Building partnerships to increase the number of situations in which FDUSD can be used, including payments, DeFi, and international remittances.
Cooperation with regulators: We will closely monitor regulatory trends in each country and continue to operate in a compliant manner.

An article in DigFin (April 2025, 4) points out that First Digital has business ambitions through FDUSD, and that its future potential is attracting attention as competition in the stablecoin market intensifies (source: DigFin).

It will be important to continue to pay attention to how FDUSD responds to these challenges and builds trust in the market.

Summary: Understand FDUSD and use it wisely

This time, we have provided a detailed explanation of the US dollar-pegged stablecoin "First Digital USD (FDUSD)," covering everything from basic information to how it works, how it can be used, and the risks involved.

To summarise the key points for FDUSD:

USD-pegged stablecoin：Operated with the goal of 1 FDUSD ≒ 1 US Dollar.
Published by First Digital: Operated by a Hong Kong-based corporate group.
Reserve-backed: Its value is (supposedly) backed by U.S. Treasury bills or cash.
Emphasis on transparency and regulatory compliance: We are working to improve reliability.
Main uses: Hedging price fluctuation risk, base currency for exchanges, use of DeFi, etc.
There are risks too: Depegging risk, issuer credit risk, regulatory risk, etc.

FDUSD has the potential to meet the important need for price stability in the cryptocurrency market, but it is a relatively new stablecoin and has experienced price instability in the past. It is important to fully understand its characteristics and risks and consider using it at your own discretion and responsibility.

I hope this article will help you deepen your understanding of FDUSD and stable coins. The world of virtual currencies is constantly evolving, so keep up with the latest information and enjoy it safely.Please invest at your own risk (DYOR – Do Your Own Research)!

Frequently Asked Questions (FAQs) about FDUSD

Q1: Is FDUSD safe?

A: FDUSD is a stablecoin that aims to keep its price pegged to 1 USD. Its value is said to be backed by reserves of US dollars and US Treasury bills held by the issuer, First Digital (Source: MyEtherWallet Blog). However, in the past, there have been cases where the price temporarily fell well below 1 USD due to market rumors (Source: blog.amberdata.io, altcoinbuzz.io). Although the issuer strives to improve the transparency of its reserves, there is always the risk of the issuer's credit risk and market fluctuations, so it cannot be said to be 100% safe. It is important to understand these risks when using it.

Q2: Will the price of FDUSD always be 1 USD?

A: Ideally, 1 FDUSD is designed and operated to be 1 US dollar, but in reality, it is not always traded at exactly 1 dollar due to the balance of market demand and supply, the status of the exchange, and the influence of macroeconomics. Usually, it tends to fluctuate around 1 dollar (e.g., around 0.998 dollars to 1.002 dollars), but in rare cases, when there is major news or market turmoil, it may temporarily deviate significantly from 1 dollar (depegged). The most recent price tends to fluctuate around 0.998 dollars (source: Binance, Gate.com, Bitget).

Q3: Where can I buy FDUSD?

A: FDUSD can be purchased at many major overseas cryptocurrency exchanges. Representative exchanges include Binance, Gate.com, MEXC, Bitget, etc. At these exchanges, you can purchase FDUSD using Japanese yen or other virtual currencies (Bitcoin, Ethereum, etc.). On some platforms, it may also be possible to purchase FDUSD directly with fiat currency via bank transfer (Source: Gate.com How to buy). There may still be few exchanges in Japan that handle FDUSD at the time of writing, so you will probably want to use overseas exchanges.

Q4: What can FDUSD be used for?

A: The main uses of FDUSD are as follows:

Store of value: It can be used to temporarily transfer assets from other cryptocurrencies with volatile price fluctuations and stabilize their value.
Transaction base currency: Many exchanges offer pairs (e.g. BTC/FDUSD) for using FDUSD to buy and sell other cryptocurrencies.
DeFi (Decentralized Finance) Service Operations: FDUSD can be deposited in DeFi protocols to earn yield or used as collateral for loans.
Remittance and Payment: It has the potential to be a faster and less expensive alternative to traditional financial systems, especially for US dollar-based transactions and international remittances.

Q5: What does the FDUSD reserve consist of?

A: According to a report by First Digital, the FDUSD reserve is mainly composed of highly safe assets. Specifically, as of March 2025, 3, it is reported to consist of US Treasury Bills, cash, bank deposits, and reserve repos (Source: MyEtherWallet Blog). The value of FDUSD is backed by managing these reserves to be equal to or greater than the total amount of FDUSD issued.

Related information

FDUSD, stable coin, crypto asset, virtual currency, First Digital USD

A thorough explanation of FDUSD: The mechanism, future prospects and risks of the US dollar-linked stablecoin