FDUSD's SPAC Merger Seeks to Strengthen U.S. Regulatory Adherence and Bolster Institutional Confidence

First Digital Group Set to Go Public Through SPAC Merger

First Digital Group, the Hong Kong-based company behind the stablecoin FDUSD, has revealed plans to enter the public market by merging with CSLM Digital Asset Acquisition Corp III, a special purpose acquisition company (SPAC) listed in the United States under the ticker KYON. This transaction, which could value First Digital between $1.5 billion and $2.5 billion, signals a significant development for the stablecoin industry, where regulatory certainty and institutional confidence are becoming increasingly important. If the deal receives approval, the newly formed company is expected to be listed on Nasdaq, possibly under the FDUSD symbol, with the merger anticipated to close in the second quarter of 2026.

FDUSD's Growth and Financials

Launched in June 2023, FDUSD is a stablecoin pegged to the U.S. dollar and supported by cash reserves and short-term U.S. government securities. Although its circulating supply dropped by 80% to $907.9 million by late 2025, FDUSD has processed more than $785 billion in transactions and is estimated to generate $50 million annually from returns on its reserves. By choosing the SPAC route, First Digital gains a quicker and more predictable entry to public markets compared to a traditional IPO. The deal is further strengthened by $100 million in private investment from major backers such as Temasek Holdings and Andreessen Horowitz.

Industry Trends and Legal Challenges

This move comes at a time when the stablecoin sector is experiencing rapid expansion, with total market capitalization reaching $316 billion in 2025, driven by new regulatory frameworks like the U.S. GENIUS Act and Hong Kong’s licensing guidelines. However, First Digital is currently involved in a legal battle with Techteryx, the issuer of TrueUSD, and crypto entrepreneur Justin Sun, who accuses the company of diverting TUSD reserves into illiquid offshore accounts. First Digital has rejected these allegations, stating it acted according to client instructions, while courts in Dubai have frozen $456 million in disputed assets.

Implications for the Stablecoin Market

Experts see the SPAC merger as a turning point for stablecoins, which are increasingly viewed as essential infrastructure for global payments and decentralized finance. Listing in the U.S. would boost FDUSD’s regulatory standing and transparency, potentially making it more attractive to institutional investors. Nevertheless, the company faces ongoing challenges, including meeting strict regulatory requirements and standing out in a market largely controlled by Tether’s USDT (holding 60% market share) and Circle’s USDC (with 23%).

The Role of SPACs in Crypto’s Evolution

This transaction highlights the growing importance of SPACs in the cryptocurrency sector. Unlike traditional IPOs, SPACs enable companies to utilize existing public entities, accelerating the process of going public and providing clearer valuation metrics. For First Digital, this strategy reflects a broader trend among crypto firms seeking greater acceptance in mainstream finance, especially as U.S. regulatory authorities under President Donald Trump show increased support for the industry.