SEC Approves Interest-Generating 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 demonstrates the regulatory agency'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 opportunities for the stablecoin industry, making it another innovative area that can attract 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 primarily came from investment returns on reserve assets (such as U.S. Treasury bonds), but are unrelated to stablecoin holders. Interest-bearing stablecoins have recognized this point and hope to disrupt the existing framework by reallocating the rights to asset income.

The core of interest-bearing stablecoins lies in the "redistribution of asset yield rights": while maintaining stability, it allows holders to directly enjoy the earnings by tokenizing the yield rights of the underlying assets. This "holding coins to earn interest" model makes earning returns accessible without thresholds, achieving "democratization of earnings".

Although transferring the underlying asset yield will reduce the profits of the issuing institution, it greatly increases the attractiveness of interest-bearing stablecoins. In the current unstable global economic environment with high inflation levels, the demand for financial products that can generate stable returns is continuously rising. Products like YLDS, which are both stable and can provide higher yields, will undoubtedly be favored by investors.

The reason why YLDS has received SEC approval is primarily because it complies with the current U.S. securities regulations. Since the U.S. has not yet established a systematic regulatory framework for stablecoins, the current regulation of stablecoins is mainly based on existing laws. The structure of interest-bearing stablecoins like YLDS is similar to traditional fixed-income products, clearly falling under the category of "securities," with no regulatory disputes.

The approval of YLDS indicates that the attitude of U.S. cryptocurrency regulation continues to improve, with regulatory agencies actively adapting to the rapidly evolving stablecoin and crypto finance market. However, this does not mean that the regulatory challenges faced by traditional stablecoins will be resolved immediately; more substantive changes may need to wait until the U.S. Congress officially passes the stablecoin regulation bill.

The Rise of Interest-bearing Stablecoins Will Drive Institutionalization of the Crypto Market

The SEC's approval of YLDS not only demonstrates the open attitude of US regulators but also suggests that stablecoins may evolve from "cash substitutes" into a new type of asset that possesses the dual attributes of both "payment tools" and "yield tools." This will accelerate the process of institutionalization and dollarization in the cryptocurrency market.

Traditional stablecoins, while meeting the demand for cryptocurrency payments, are mostly used by institutions solely as short-term liquidity tools due to the lack of interest income. In contrast, 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.

The large-scale influx of institutional funds will further drive the interest-bearing stablecoin market to achieve rapid growth, making it an even more indispensable part of the crypto ecosystem. Research institutions are optimistically forecasting 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, 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 its de-dollarization, the digital on-chain world continues to gravitate towards the US dollar. Whether it is the large-scale adoption of dollar stablecoins or the tokenization wave initiated by Wall Street institutions, the US is continuously strengthening the influence of dollar assets in the crypto market.

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 eternal demand of the market for "money making money." With the improvement of the regulatory framework and the influx of institutional funds, interest-bearing stablecoins may reshape the stablecoin market and enhance the dollarization trend of crypto financial innovation. However, this process must also balance innovation and risk to avoid repeating past mistakes. Only in this way can interest-bearing stablecoins truly achieve the goal of "making it easy for everyone to earn returns."