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 decision not only demonstrates the regulator's recognition of innovation in crypto finance but also indicates that stablecoins are transitioning from mere payment tools to compliant yield-bearing assets. This could bring more possibilities to the stablecoin sector, making it another innovative field that attracts large-scale institutional funds after Bitcoin.

Analysis of the Reasons for SEC Approval of YLDS

In 2024, a well-known stablecoin issuer achieved an annual profit of up to $13.7 billion, surpassing the profit levels of traditional financial giants. These profits mainly came from the investment income of reserve assets (such as U.S. Treasury bonds), but users could not benefit from it. This is exactly the situation that interest-bearing stablecoins hope to change.

The core of interest-bearing stablecoins lies in the "redistribution of asset income rights." It not only maintains stability but also allows holders to directly enjoy income by tokenizing the income rights of underlying assets. This "holding coins to earn interest" model realizes "income democratization" and lowers the participation threshold for users.

Despite the potential decrease in profits for issuing institutions, the appeal of interest-bearing stablecoins has significantly increased. In the current environment of global economic instability and high inflation, the demand for financial products that can provide stable returns is on the rise. Products like YLDS, which are both stable and able to offer rates higher than traditional bank interest rates, will undoubtedly be favored by investors.

The reason why YLDS has been approved by the SEC is mainly because it complies with current U.S. securities regulations. Since the U.S. has not yet established a systematic regulatory framework for stablecoins, YLDS, which is structured as an interest-bearing stablecoin, clearly falls under the category of "securities" and avoids regulatory disputes.

Although the approval of YLDS indicates a continued improvement in the U.S. cryptocurrency regulatory attitude, it does not immediately change the regulatory challenges faced by traditional stablecoins. The industry expects that a stablecoin regulatory bill in the U.S. may gradually be implemented within the next 1 to 1.5 years.

YLD allocates the underlying asset returns through smart contracts and employs a strict KYC verification mechanism, providing a compliance 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 related regulatory issues.

The Impact of Interest-Earning Stablecoins on the Cryptocurrency Market

The SEC's approval of YLDS signifies that stablecoins may evolve from "cash alternatives" to a new type of asset that combines the dual attributes of "payment tools" and "yield tools," and will accelerate the institutionalization and dollarization process of the cryptocurrency market.

Interest-bearing stablecoins not only generate stable returns but also improve capital turnover through intermediary-free and around-the-clock on-chain trading, offering advantages in capital efficiency and instant settlement capabilities. With the increasing acceptance among institutional investors, the interest-bearing stablecoin market is expected to achieve rapid growth.

Research institutions are optimistically predicting that interest-bearing stablecoins will experience explosive growth in the next 3-5 years, capturing around 10-15% of the stablecoin market, becoming another category of crypto assets that attracts significant attention and investment from large institutions after Bitcoin.

The rise of interest-bearing stablecoins will further consolidate the dominance of the US dollar in the crypto world. Although the real economy is accelerating its de-dollarization, the digital on-chain world continues to gravitate towards the US dollar. Whether it is the large-scale application of US dollar stablecoins or the tokenization wave, the United States is continuously strengthening the influence of dollar assets in the crypto market.

In the short term, this trend is difficult to reverse. For tokenized innovation and the crypto financial market, there are currently no more alternative options besides dollar assets represented by US Treasuries. The SEC's approval of YLDS indicates that US regulators have given the green light for interest-bearing stablecoins similar to US 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 an important milestone in the democratization of finance. It reveals the market's ongoing demand for "money making money." With the improvement of regulatory frameworks and the influx of institutional capital, interest-bearing stablecoins may reshape the stablecoin market and enhance the dollarization trend in crypto financial innovation. However, this process also 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 inclusive finance.