KuCoin has added FinChain Dollar to its off-exchange collateral system, allowing eligible institutions to use the token’s mapped value to support trading without first transferring it to the exchange. The companies said in their partnership announcement that FUSD will join the real-world assets supported by KuCoin’s RWA Collateral Mirroring Solution.
The arrangement separates custody from execution. An institution keeps FUSD within a designated custody framework, while KuCoin assigns eligible collateral value to its trading account. The exchange then uses that value in its own margin, risk and position-management systems. The token can continue accruing yield while the trader accesses KuCoin’s order books.
FinChain is a blockchain-finance platform under Fosun Wealth Holdings. The KuCoin agreement gives the Fosun-backed Asian yield token another route into offshore institutional trading, but distribution does not answer the questions that matter for collateral: who holds the reserve, what discount KuCoin applies and how the asset can be realised during a default.
The release does not name the custodian, disclose the collateral haircut or explain how quickly KuCoin can liquidate FUSD after a margin breach. It also provides no minimum account size, supported trading products or legal agreement governing the pledge. Those are the terms that determine whether the integration delivers useful credit capacity rather than simply adding another eligible asset.
FUSD Stays Off KuCoin While Its Value Moves On-Exchange
Collateral mirroring creates an internal credit representation rather than moving the underlying token into the exchange account. KuCoin receives information about the quantity and status of FUSD held with the approved custodian, applies its eligibility rules and credits a corresponding amount of collateral value to the institution’s trading account.
The institution therefore faces two connected systems. The custodian controls the asset, while KuCoin controls the amount of trading credit and the positions supported by it. The structure can reduce the amount left directly on an exchange, but it does not eliminate counterparty or operational risk. A custody freeze, valuation dispute, communication failure or rapid market move can still interrupt the link between the asset and the trading account.
KuCoin already uses this model with other tokenized assets. In April, the exchange added Asseto’s CASH+ to the same collateral framework, while an earlier pilot with AlloyX connected a tokenized money-market product to KuCoin’s off-exchange settlement system. The FUSD agreement broadens the product list rather than creating a new settlement model.
FUSD Mints Against USDT And Advertises A 3.45% Return
FinChain describes FUSD as an overcollateralized stablecoin backed by tokenized US Treasury bills and money-market funds. Its public FUSD page says the minimum reserve ratio is 100% and that earnings from the reserve assets fund the token’s native yield. The FinChain application displayed an expected annual return of 3.45% when checked on 31 August.
Yield is distributed through a multiplier that increases token balances daily, including at weekends. FinChain says the issuer predetermines the rate, meaning the advertised return is not a fixed coupon from a specific Treasury security. It can change as the issuer adjusts the multiplier or as the return on the reserve portfolio changes.
The token’s entry and exit mechanics also differ from a conventional money-market fund. FinChain says FUSD currently supports one-for-one minting against USDT rather than bank dollars. Its fee documentation lists a standard minting fee of 0.1% and a redemption charge of 0.5%. Since 10 February 2026, eligible customers have received a reduction of unspecified size on the minting fee. Requests are processed after a daily cutoff on Hong Kong business days, so the token’s daily balance accrual does not mean it is always redeemable into reserve assets in real time.
At the published standard rates, minting and redemption add up to about 0.6% before trading, custody or network costs. Against the 3.45% expected annual return shown in the FinChain app on 31 August, that is slightly more than two months of gross yield. An eligible customer’s actual cost should be lower because of the minting-fee reduction, but FinChain does not publish the reduction or the resulting rate.
This distinction matters for collateral. KuCoin may value FUSD close to one dollar during ordinary conditions, but an institution facing a margin call needs to know whether the exchange can realise that value immediately. The cost and timing of moving from FUSD to USDT, and then from USDT to cash if required, should feed into the haircut and liquidation policy.
The Reserve Panel Values Did Not Render When Checked
FinChain labels its reserve section as real-time transparency and dates the information to July 2026. The page carries fields for circulating supply, proof of reserves and the reserve ratio, but the values did not render when checked on 31 August. The panel also did not identify the individual Treasury products, portfolio allocations, custodian or attestation provider behind the reserve.
The partnership announcement similarly refers to highly rated government bonds and money-market funds without naming them. An Avalanche launch post from February identifies BNY Mellon, ChinaAMC and Taikang among institutions providing money-market funds. That supplies manager context, but neither the collateral announcement nor the reserve panel links those names to a current FUSD portfolio, allocation or custodian.
FinChain also provides contract addresses for FUSD on Ethereum, Avalanche, Sonic and exSat, but an on-chain supply figure cannot verify off-chain assets by itself. No public attestation, current portfolio report or auditor opinion was linked with the KuCoin launch. The unresolved issue for a collateral user is therefore not whether FinChain has named asset managers in marketing, but whether the current token supply can be matched to verified reserve assets and a disclosed liquidation route.
That is a meaningful difference from products such as BlackRock’s tokenized Treasury fund, where the fund, administrator and custody chain are publicly identified. OKX’s BUIDL collateral arrangement names Standard Chartered as custodian, while Binance’s programme with Franklin Templeton identifies the money-market fund platform supporting the pledged shares.
KuCoin and FinChain said they will continue working on custody connectivity, collateral eligibility and risk parameters. That wording indicates that some operational terms may still be determined bilaterally for each institution. It does not establish whether the product is immediately available to every KuCoin institutional client.
FinChain’s Bermuda Licence Claim Remains Unresolved
FinChain’s issuance documentation identifies Finchain Holdings Bermuda Limited as the planned FUSD issuer. It describes the entity as a Bermuda separate account company wholly owned by FinChain Holdings (Cayman) Limited. The same document says the Bermuda company “will operate” under a digital asset business licence permitting the issuance, sale and redemption of digital assets.
An exact-name search of the Bermuda Monetary Authority’s regulated-entities register for Finchain Holdings Bermuda Limited returned no record on 31 August. That result does not rule out a register delay, a pending application or a licence held through a different entity. Coupled with the future-tense wording in FinChain’s own document, however, it leaves the claimed regulatory status unresolved.
The absence does not by itself establish that FUSD is being issued without permission. It does mean the release’s description of FinChain as the provider of the token and its backing is incomplete. Institutions evaluating FUSD need the issuer’s exact legal name, licence class and number, the account company holding the reserves, and the contractual redemption counterparty.
KuCoin’s own European authorisation does not resolve that question. KuCoin EU received an Austrian MiCA authorisation on 27 November 2025. Yet the Austrian FMA said on 18 May 2026 that, although it had lifted a ban on new business, commencement of operations remained prohibited because supervisory conditions had not been fully met. The FUSD announcement describes offshore institutional use and does not say the product is offered through KuCoin EU.
Haircuts And Liquidation Rights Decide The Capital Benefit
A yield-bearing token can improve capital use when it replaces idle stablecoin margin. Instead of selling a Treasury-linked asset, moving the proceeds to an exchange and giving up the yield, an institution can keep the position in custody and borrow trading capacity against it. The model has spread across large platforms, with Binance accepting USYC and cUSDO through off-exchange structures and Deribit and Crypto.com adding BUIDL as margin collateral.
The benefit is not equal to the token’s face value. KuCoin must account for price deviation, redemption delays, custody access and the time required to sell the collateral. A 10% haircut would turn one million dollars of FUSD into nine hundred thousand dollars of usable collateral. A concentration limit could reduce it further. Neither figure was disclosed.
Liquidation rights are equally important. If a leveraged position falls below maintenance margin, KuCoin needs a contractual route to instruct the custodian, seize or transfer the pledged FUSD and convert it quickly enough to cover the deficit. The release says the asset remains within the custody arrangement but does not describe control rights during a default.
These omissions do not negate the utility of the integration. They define what remains to be proven. Tokenized Treasury products are increasingly used as a collateral layer rather than a passive cash holding, and exchange distribution can be more valuable than another blockchain deployment. FUSD now has that distribution route on KuCoin, while the reserve evidence and collateral terms remain thinner than those disclosed for larger tokenized funds.
The next disclosures should identify the licensed issuer and custodian, publish the reserve portfolio and attestation, and set out the haircut, valuation frequency and liquidation process. Until then, KuCoin has established that FUSD is eligible for its collateral system, but not how much credit one token provides or how the structure performs when the collateral must actually be sold.
