SEC Approves First Interest-Bearing Stablecoin YLDS, Opening a New Era of Stablecoin Yields

Recently, the U.S. Securities and Exchange Commission (SEC) approved the first interest-bearing stablecoin YLDS launched by Figure Markets. This move not only marks the recognition of U.S. regulators of innovation in crypto finance, but also indicates that stablecoins are evolving from mere payment tools to compliant yield-generating assets. This could open up broader development space for the stablecoin sector, making it another innovative field that can attract large-scale institutional funds, following Bitcoin.

Reasons for SEC Approval of YLDS

In 2024, a well-known stablecoin issuer achieved an annual profit of up to 13.7 billion USD, even surpassing traditional financial giant Mastercard. These profits mainly come from investment returns generated by reserve assets (such as US Treasury bonds), but are unrelated to stablecoin holders. Users cannot gain asset appreciation and investment returns by holding stablecoins, which is precisely the breakthrough that interest-bearing stablecoins are targeting.

The core of interest-bearing stablecoins lies in the "redistribution of asset income rights". In the traditional stablecoin model, users sacrifice the time value of their funds in exchange for stability. Interest-bearing stablecoins can maintain stability while tokenizing the income rights of underlying assets, allowing holders to directly enjoy the returns. This "hold-to-earn" model makes fund returns accessible without thresholds, achieving "democratization of income".

The reason YLDS has received SEC approval is that it complies with current U.S. securities regulations. Since the U.S. has not yet established a systematic regulatory framework for stablecoins, regulation is currently based on existing laws. YLDS, as a yield-generating interest-bearing stablecoin, has a structure similar to traditional fixed-income products, clearly falls under the category of "securities," and avoids regulatory disputes.

YLD distributes the interest income from underlying assets (mainly U.S. Treasury bonds, commercial paper, etc.) to holders through smart contracts, and uses a strict KYC verification mechanism to bind income distribution to compliant identities, reducing regulatory concerns about anonymity. These compliance designs provide a reference for similar projects in the future.

The Rise of Interest-Bearing Stablecoins Will Accelerate the Institutionalization of the Crypto Market

The SEC's approval of YLDS indicates that stablecoins may evolve from "cash substitutes" into a new type of asset that combines the dual attributes of both "payment tools" and "yield tools", which will accelerate the institutionalization and dollarization process of the crypto market.

Interest-bearing stablecoins not only generate stable returns but also improve capital turnover through intermediary-free and round-the-clock on-chain transactions, demonstrating significant advantages in capital efficiency and instant settlement capabilities. Analyses have pointed out that hedge funds and asset management institutions have begun to incorporate stablecoins into their cash management strategies. After YLDS receives SEC approval, it will further alleviate institutional compliance concerns, enhancing institutional investors' acceptance and participation in such stablecoins.

It is expected that interest-bearing stablecoins will experience explosive growth in the next 3-5 years, capturing about 10-15% of the stablecoin market, and becoming another category of crypto assets that can attract significant institutional attention and investment after Bitcoin.

Interest-earning stablecoins consolidate the position of the US dollar in the crypto world

The rise of interest-bearing stablecoins will further consolidate the dominance of the US dollar in the crypto world. Although the physical world is accelerating its de-dollarization, the digital on-chain world continues to gravitate towards the US dollar. Whether it is the widespread adoption of US dollar stablecoins or the wave of tokenization led by Wall Street institutions, the influence of US dollar assets in the crypto market is continuously strengthening.

The SEC's approval of YLDS indicates that U.S. regulators have given the green light for interest-bearing stablecoins linked to U.S. Treasury securities, which will attract more projects to launch similar products. Although the future revenue models for interest-bearing stablecoins may become more diversified, and reserve assets may expand to include real estate, gold, corporate bonds, and other types of RWA, U.S. Treasury securities will still dominate the underlying asset pool of interest-bearing stablecoins as a risk-free asset.

Conclusion

The approval of YLDS is not only a compliance breakthrough in crypto innovation but also a milestone in the democratization of finance. It reveals the market's eternal demand for "making money from money." With the improvement of regulatory frameworks and the influx of institutional funds, interest-bearing stablecoins are expected to reshape the stablecoin market and enhance the dollarization trend in crypto financial innovation. However, this process also needs to balance innovation and risk to avoid repeating past mistakes. Only in this way can interest-bearing stablecoins truly enable more people to enjoy the benefits brought by financial innovation.