The interest-bearing stablecoin YLDS has been approved by the SEC, opening a new era of stablecoin yields.

The U.S. Securities and Exchange Commission (SEC) recently approved the first interest-bearing stablecoin YLDS launched by Figure Markets. This decision not only marks the regulator's recognition of innovation in crypto finance but also indicates that stablecoins are evolving from mere payment tools to compliant yield-bearing assets. This could open up broader development space for the stablecoin sector, making it another innovative field attracting large-scale institutional funds after 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, surpassing the profit levels of traditional financial giants. These profits mainly came from the investment returns of reserve assets, but were unrelated to the holders. Interest-bearing stablecoins precisely target this breakthrough.

The core of interest-bearing stablecoins lies in the "redistribution of asset income rights". While maintaining stability, it tokenizes the income rights of underlying assets, allowing holders to directly enjoy the benefits. This model of "earning interest by holding coins" makes the returns accessible without thresholds, achieving "democratization of income".

The key reason why YLD has received SEC approval lies in its compliance with the current U.S. securities regulations. Due to its structure being similar to traditional fixed income products, interest-bearing stablecoins clearly fall under the category of "securities," with no regulatory disputes. This provides the prerequisite for the SEC to include them under regulation.

However, this does not mean that the regulatory dilemmas faced by traditional stablecoins will change immediately. The industry expects that the regulatory bill for stablecoins in the United States may gradually be implemented within the next 1 to 1.5 years.

The compliance design of YLDS serves as a reference for similar projects in the future. In the next 1-2 years, more compliant interest-bearing stablecoin products may emerge, which will also encourage more countries and regions to consider relevant regulatory measures. For regions that have already regarded stablecoins as payment tools, it may be necessary to adjust the existing regulatory framework or consider bringing interest-bearing stablecoins under the regulatory purview of tokenized securities.

The Rise of Interest-Generating Stablecoins Accelerates the Institutionalization of the Crypto Market

The SEC's approval of YLDS indicates that stablecoins may evolve from "cash alternatives" to a new type of asset that possesses both "payment tool" and "yield tool" attributes, 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 24/7 on-chain transactions. Some investment institutions have pointed out that hedge funds and asset management firms have begun to incorporate stablecoins into their cash management strategies. After the approval of YLDS, the acceptance and participation of institutional investors in such stablecoins may further increase.

Optimistically, interest-bearing stablecoins are expected to experience explosive growth in the next 3-5 years, capturing about 10-15% of the stablecoin market, becoming another category of crypto assets that attracts significant institutional attention and investment following Bitcoin.

The rise of interest-bearing stablecoins will further consolidate the dominance of the US dollar in the crypto world. While the physical world is accelerating the de-dollarization process, the digital on-chain world continues to gravitate towards the US dollar. Whether it is the large-scale adoption of US dollar stablecoins or the tokenization wave driven by Wall Street institutions, both are strengthening the influence of US dollar assets in the crypto market.

In the short term, this trend is hard to reverse. From the perspective of liquidity, stability, and market acceptance, there are currently no more alternative options besides dollar assets represented by U.S. Treasuries. The SEC's approval of YLDS indicates that U.S. regulators have given the green light for interest-bearing stablecoins similar to U.S. Treasuries, which will attract more projects to launch similar products.

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 "money making money." With the improvement of regulatory frameworks and the influx of institutional funds, interest-bearing stablecoins may reshape the stablecoin market and enhance the dollarization trend in crypto financial innovation. However, this process requires a balance between innovation and risk to avoid repeating past mistakes. Only in this way can interest-bearing stablecoins truly realize the vision of "allowing everyone to earn money effortlessly."