FDUSD's SPAC Merger Aims to Cement U.S. Regulatory Compliance and Institutional Trust

First Digital Group, the Hong Kong-based stablecoin issuer behind FDUSD, has announced a definitive agreement to go public via a merger with CSLM Digital Asset Acquisition Corp III, a U.S.-listed special purpose acquisition company (SPAC) trading under the ticker KYON. The deal, expected to value the company between $1.5 billion and $2.5 billion, marks a strategic shift for the stablecoin market, where regulatory clarity and institutional trust are increasingly critical. The merger, if approved, would see the combined entity listed on the Nasdaq, potentially under the FDUSD ticker, with a projected completion date in Q2 2026.

FDUSD, which launched in June 2023, is pegged 1:1 to the U.S. dollar and backed by cash and short-term U.S. government debt. Despite an 80% decline in its circulating supply to $907.9 million as of late 2025, the stablecoin has processed over $785 billion in transactions and generates an estimated $50 million in annual revenue from reserve asset returns. The SPAC route offers First Digital a faster and more predictable path to public markets compared to traditional IPOs, with backers including Temasek Holdings and Andreessen Horowitz committing $100 million in private investment.

The deal's timing reflects broader trends in the stablecoin sector, which saw its market capitalization surge to $316 billion in 2025 amid global regulatory frameworks like the U.S. GENIUS Act and Hong Kong's licensing regime. However, First Digital faces a complex backdrop: the company is entangled in a legal dispute with TrueUSD issuer Techteryx and billionaire crypto entrepreneur Justin Sun, who alleges misappropriation of TUSD reserves into illiquid offshore vehicles. First Digital denies the claims, asserting it followed client instructions, while Dubai courts have frozen $456 million in contested assets.

Analysts view the SPAC merger as a pivotal moment for stablecoins, which are increasingly seen as infrastructure for cross-border payments and DeFi. A U.S. listing would enhance FDUSD's regulatory compliance and transparency, potentially attracting institutional adoption. Yet challenges remain, including navigating stringent regulatory scrutiny and differentiating FDUSD in a market dominated by Tether's USDT (60% share) and Circle's USDC (23%).

The merger also underscores the evolving role of SPACs in crypto. Unlike traditional IPOs, SPACs allow companies to leverage existing public shells, reducing time-to-market and offering clearer valuation benchmarks. For First Digital, the move aligns with a broader push by crypto firms to gain legitimacy in traditional finance, particularly as U.S. regulators under President Donald Trump adopt a more pro-industry stance.