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

Recently, the U.S. Securities and Exchange Commission (SEC) approved Figure Markets to launch the first interest-bearing stablecoin YLDS. This move marks the recognition of regulatory bodies towards innovation in crypto finance and indicates that stablecoins are evolving from mere payment tools to compliant yield-bearing assets. This could bring greater development space to the stablecoin sector, making it an innovative field capable of attracting large-scale institutional funds after Bitcoin.

Why did the SEC approve YLDS?

In 2024, a certain stablecoin issuer achieved an annual profit of up to $13.7 billion, surpassing some traditional financial giants. These profits mainly came from the investment returns of reserve assets (such as U.S. Treasury bonds), but are unrelated to the holders. Users cannot obtain asset appreciation and investment returns by holding this stablecoin, which is precisely the breakthrough that interest-bearing stablecoins aim for.

The core of interest-bearing stablecoins lies in the "redistribution of asset income rights": while maintaining stability, it allows holders to directly enjoy the income by tokenizing the income rights of the underlying assets. This model addresses the pain points of the "silent majority": although traditional stablecoins can also generate income through staking, complex operations and compliance risks hinder large-scale adoption. In contrast, YLDS and similar "hold-to-earn" stablecoins have made income generation accessible without thresholds, achieving "democratization of income."

The reason YLDS has obtained SEC approval is that it complies with current U.S. securities regulations. Since a systematic regulatory framework for stablecoins has not yet been established, the regulation of stablecoins in the U.S. currently mainly follows existing laws. YLDS, as an interest-bearing stablecoin that can generate yields, is structured similarly to traditional fixed-income products and clearly falls under the category of "securities," with no regulatory disputes.

YLD distributes the interest income of underlying assets (mainly US Treasury bonds, commercial papers, etc.) to holders through smart contracts, and ties the distribution of income to compliant identities through a strict KYC verification mechanism, reducing regulatory concerns about anonymity. These compliance designs provide a reference for subsequent similar projects seeking regulatory approval. In the next 1-2 years, more compliant interest-bearing stablecoin products may emerge, prompting more countries and regions to consider the necessity of developing and regulating interest-bearing stablecoins.

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

The SEC's approval of YLDS not only demonstrates the open attitude of U.S. regulation but also indicates that stablecoins may evolve from a "cash substitute" into a new type of asset that combines the attributes of both a "payment tool" and a "yield tool," accelerating the institutionalization and dollarization 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 trading, demonstrating significant advantages in capital efficiency and instant settlement capabilities. Some investment institutions have begun to incorporate stablecoins into their cash management strategies, and the approval of YLDS will further alleviate institutional compliance concerns, increasing participation among institutional investors.

The large-scale influx of institutional funds will drive rapid growth in the interest-bearing stablecoin market. Some believe that interest-bearing stablecoins will experience explosive growth in the next 3-5 years, capturing approximately 10-15% of the stablecoin market, becoming another category of crypto assets that attracts significant institutional attention and funding following BTC.

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 lean towards the US dollar. Whether it is the widespread application of dollar stablecoins or the tokenization wave initiated by Wall Street institutions, the influence of 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 bonds, which will attract more projects to launch similar products. Although the revenue model for interest-bearing stablecoins may become more diverse in the future, and reserve assets may expand to include real estate, gold, corporate bonds, and other types of RWAs, U.S. Treasury bonds will still hold an important position in the underlying asset pool of interest-bearing stablecoins as a risk-free asset.

Conclusion

The approval of YLDS is not only a regulatory breakthrough for crypto innovation but also a milestone in financial democratization. It reveals the eternal demand in the market 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 of crypto financial innovation. However, this process also needs to balance innovation and risk, avoiding repeating past mistakes. Only in this way can interest-bearing stablecoins truly realize the vision of "allowing everyone to earn money while lying down."