Interest-earning stablecoin YLDS 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 move not only reflects the regulatory body's recognition of innovations in crypto finance but also indicates that stablecoins are transitioning 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 capable of attracting large-scale institutional funds after Bitcoin.

Reasons for SEC Approval of YLDS

In 2024, a large stablecoin issuer's annual profit reached 13.7 billion USD, surpassing some traditional financial giants. These profits mainly came from the investment returns of reserve assets, but were unrelated to stablecoin holders. This is precisely the area that interest-bearing stablecoins aim to break into.

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 for stability. In contrast, interest-bearing stablecoins maintain stability while tokenizing the income rights of the underlying assets, allowing holders to directly enjoy the earnings. This "holding coins to earn interest" model lowers the participation threshold for users and achieves "democratization of earnings".

The reason YLD has received approval from the SEC is mainly because it complies with current securities regulations. As an interest-bearing stablecoin that can generate income, its structure is similar to traditional fixed-income products, clearly falling under the category of "securities." This allows the SEC to incorporate it into the regulatory framework.

YLDS distributes the interest income of underlying assets 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 Impact of Interest-bearing Stablecoins

The SEC's approval of YLD suggests that stablecoins may evolve from a "cash substitute" to a new type of asset with dual attributes of both "payment tool" and "yield tool", which will accelerate the institutionalization and dollarization process of the crypto market.

Interest-bearing stablecoins not only generate stable returns but also enhance capital turnover through intermediary-free and round-the-clock on-chain transactions, offering significant advantages in capital efficiency and instant settlement capabilities. These features have led institutional investors to start incorporating stablecoins into their cash management strategies.

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

The rise of interest-bearing stablecoins will further consolidate the dominance of the US dollar in the crypto world. Although the real world is accelerating its de-dollarization, the digital blockchain world continues to gravitate towards the US dollar. Whether it is the widespread use of US dollar stablecoins or the wave of tokenization, both are strengthening the influence of dollar assets in the crypto market.

Conclusion

The approval of YLDS is not only a regulatory breakthrough in crypto innovation but also a milestone in the democratization of finance. It reveals the market's eternal demand for "money making money." As regulatory frameworks improve and institutional funds flow in, interest-bearing stablecoins may reshape the stablecoin market and enhance the dollarization trend of 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 achieve the goal of allowing more people to enjoy stable returns.