Hong Kong Stablecoin FDUSD’s Market Cap Surges by 10x In Two Days

First Digital USD, a stablecoin launched by a Hong Kong-based trust, is surging after Binance said it would list the fiat-backed token.

FDUSD’s market cap soared to more than $260M from $20M in just two days after an Aug. 3 announcement that Binance, the leading centralized exchange, would launch spot and margin pairs for FDUSD against BTC and ETH.

FDUSD drove more than $31.3M worth of volume in the past 24 hours, up from less than $70,000 on July 31.

FDUSD market cap. Source: CoinGecko.

Binance is promoting the token by imposing zero trading fees in BTC trading and ETH market making “until further notice.”

Volatility in Stablecoin Land

The rise of FDUSD comes after a tough few months for the stablecoin ecosystem.

Algorithmic stablecoins experienced a nearly extinction-level event after the collapse of Terra and its UST token in May last year. In February, New York financial regulators ordered Paxos to stop issuing the Binance USD (USD) stablecoin, then comprising the third-largest stable token.

USDC, the second largest stablecoin, suffered a depeg and traded below $0.88 as traders feared its exposure to failing U.S. banks. DAI, the top decentralized stable token, traded below $0.90 in February as holders were rattled because of its exposure to USDC.

Tether, the top stablecoin by capitalization, also suffered a less than slight depeg of half a cent in June after claiming to suffer a malicious attack reminiscent of the strategy that DEX traders used to unhinge UST from the dollar.

Hong Kong regulation

The rise of FDUSD also comes as Hong Kong’s financial regulators are making moves to embrace the digital asset industry.

First Digital was licensed following the introduction of landmark legislation overseeing Hong Kong’s crypto sector on the same day. The rules prohibit Hong Kong-based retail traders from accessing FDUSD.

First Digital said reserves of USD cash and cash equivalents held by regulated financial institutions in Asia back the token.