What Is USD1? Inside the Fast-Rising Stablecoin Backed by US Treasuries
A New Player in the Stablecoin Race
In a market long dominated by giants like USDT and USDC, a new contender is making waves: USD1, a fiat-backed stablecoin launched in March 2025 by World Liberty Financial Inc. (WLFI). Designed to maintain a 1:1 peg with the U.S. dollar, USD1 is built for speed, stability, and large-scale financial operations—especially in the institutional space.
Within weeks of launch, USD1 crossed $2.1 billion in market cap, making it the fastest-growing stablecoin to date. A big reason? A $2 billion deal between Abu Dhabi’s MGX and Binance, announced at Token2049 Dubai in April, where USD1 served as the exclusive transfer medium.
Let’s break down what makes USD1 different, and what it means for the future of stablecoins.
What Is USD1—and How Does It Work?
USD1 is a fiat-backed stablecoin, meaning each token is designed to be redeemable for one U.S. dollar. It operates on both Ethereum and BNB Chain, with plans to expand to other blockchains for broader DeFi integration.
To maintain its peg, USD1 relies on a conservative reserve model. It’s backed 1:1 by a mix of short-term U.S. treasuries, cash deposits, and other liquid equivalents, all held in custody by BitGo, a leading digital asset custodian known for institutional-grade security.
The stablecoin’s redemption mechanism is similar to USDC and USDT. If USD1 trades below $1 on the open market, users can buy it at a discount and redeem it for a full dollar—creating a natural arbitrage loop that keeps the peg tight.
Visibility and Transparency: Still a Work in Progress
While WLFI has pledged to conduct third-party audits to verify reserves, it has yet to release public attestations showing the full composition of its backing assets. This lack of transparency may raise eyebrows, particularly among cautious institutional buyers or regulators.
By contrast, USDC and USDT routinely publish attestation reports detailing their holdings. For USD1 to fully compete at the top level, greater visibility into reserves will likely be expected.
Institutional Focus Sets USD1 Apart
Unlike most stablecoins, which are often used by retail crypto traders, USD1 is clearly aiming higher. Its pitch? Be the go-to digital dollar for arge-scale financial deals and institutional-grade liquidity.
That’s where WLFI’s strategic direction comes into play. Co-founded by Zach Witkoff and inspired by Donald J. Trump, WLFI positions itself at the intersection of traditional finance and decentralized infrastructure. Though it insists that USD1’s success is tied to the U.S. economy, not partisan politics, its branding may influence perceptions—positively or negatively—depending on the audience.
Tech Stack and Interoperability
Beyond Ethereum and BNB Chain, WLFI is planning to bring USD1 to more networks, enhancing its interoperability in the DeFi space. With BitGo’s custody and BitGo Prime’s brokerage services in the mix, USD1 offers not just token security, but also regulated trading infrastructure—an appealing combo for institutional partners.
And on May 22, Binance added USD1 to its Spot market, offering direct trading pairs against USDT—a significant validation of the token’s liquidity and appeal.
Final Take
USD1 is entering the stablecoin market with ambitious goals and real momentum. Backed by U.S. treasuries, supported by BitGo, and already in the hands of major players, it’s staking out territory in the institutional finance space. But questions around transparency and political ties may shape how it’s received as it grows.
For investors and institutions looking for a fiat-backed digital dollar outside the USDT/USDC duopoly, USD1 is one to watch.