SEC Approves 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 regulatory body'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 open up broader development opportunities for the stablecoin sector, making it another innovative area capable of attracting large-scale institutional funds after Bitcoin.

Reasons for SEC Approval of YLDS

In 2024, a certain stablecoin issuer achieved an annual profit of 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. Interest-bearing stablecoins have seized this breakthrough, aiming to achieve "redistribution of asset income rights."

The core advantage of interest-bearing stablecoins is that they allow holders to directly enjoy the benefits by tokenizing the rights to the underlying asset's yield, while maintaining stability. This "holding coins to earn interest" model lowers the participation threshold for users and achieves true "democratization of returns."

The reason why YLDS has obtained SEC approval lies in its compliance with current U.S. securities regulations. As an interest-bearing stablecoin that can generate yields, YLDS is structurally similar to traditional fixed-income products and clearly falls under the category of "securities," thus avoiding regulatory disputes.

The Impact of Interest-bearing Stablecoins

The SEC's approval of YLDS suggests that stablecoins may evolve from a "cash substitute" into a new type of asset that possesses both "payment tool" and "yield tool" attributes. This 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 are expected to attract more institutional investors.

Some analyses suggest that interest-bearing stablecoins will experience explosive growth in the next 3-5 years, potentially capturing around 10-15% of the stablecoin market share, becoming another category of crypto assets that can attract significant institutional attention and investment after Bitcoin.

Consolidation of the Dollar's Dominance

Despite the trend of de-dollarization in the real economy, the trend of dollarization is strengthening in the digital on-chain world. Whether it is the widespread use of dollar stablecoins or the tokenization wave driven by Wall Street institutions, both are enhancing the influence of dollar assets in the crypto market.

The SEC's approval of YLDS indicates that U.S. regulators have given the green light for interest-bearing stablecoins backed by U.S. Treasury bonds, which may attract more projects to launch similar products. Although the yield model for interest-bearing stablecoins may become more diversified in the future, with reserve assets potentially expanding to other types of physical assets, U.S. Treasury bonds, as a risk-free asset, are expected to remain dominant in the underlying asset pool of interest-bearing stablecoins.

Conclusion

The approval of YLDS is not only a regulatory breakthrough in crypto innovation but also an important milestone in the democratization of finance. It reveals the market's ongoing demand for "funds earning interest." With the improvement of regulatory frameworks and the influx of institutional funds, interest-bearing stablecoins are expected to reshape the landscape of the stablecoin market and strengthen the dollarization trend in crypto financial innovation. However, in this process, we also need to balance innovation and risk to avoid repeating past mistakes. Only then can interest-bearing stablecoins truly fulfill the vision of allowing more people to enjoy financial returns.