Interest-bearing stablecoin YLDS approved, ushering in a new era for stablecoins

The U.S. Securities and Exchange Commission (SEC) has recently approved the first interest-bearing stablecoin YLDS launched by Figure Markets. This decision not only marks the recognition of regulatory agencies for innovation in crypto finance but also indicates that stablecoins are evolving from purely payment tools into compliant yield-bearing assets. This could bring more possibilities to the stablecoin space, making it another innovative area that can attract large-scale institutional funds after Bitcoin.

The Reason for SEC Approval of YLDS

In 2024, a well-known stablecoin issuer achieved an annual profit of up to $13.7 billion, surpassing the profitability levels of traditional financial giants. These profits primarily stem from the investment returns of reserve assets, but are unrelated to holders. Interest-bearing stablecoins are precisely targeting this point, attempting to disrupt the existing landscape.

The core of interest-bearing stablecoins lies in the "redistribution of asset income rights". They allow holders to directly enjoy the benefits by tokenizing the income rights of underlying assets while maintaining stability. This model of "earning interest by holding coins" makes capital gains accessible without thresholds, achieving "democratization of income".

The reason YLDS was able to obtain SEC approval lies in its compliance with current U.S. securities regulations. Due to its structure being similar to traditional fixed-income products, the interest-bearing stablecoin clearly falls under the category of "securities," and there are no regulatory disputes. This is a prerequisite for YLDS to be included in SEC regulation.

However, this does not mean that the regulatory dilemmas faced by traditional stablecoins will change immediately. More changes will have to wait for the U.S. Congress to formally pass the stablecoin regulatory bill, which is expected to gradually come into effect in the next 1 to 1.5 years.

The Impact of Interest-bearing Stablecoins

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

Interest-earning stablecoins not only generate stable returns but also enhance capital turnover through intermediary-free and round-the-clock on-chain trading, offering significant advantages in capital efficiency and instant settlement capabilities. These features may attract more institutional investors to participate.

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

The trend of dollarization is strengthening

The rise of interest-bearing stablecoins will further consolidate the dominance of the US dollar in the crypto world. Although the physical world is accelerating the process of de-dollarization, the digital on-chain world continues to gravitate towards the US dollar.

From the perspectives of liquidity, stability, and market acceptance, there are currently no more alternative options for tokenized innovation and the crypto financial market besides dollar assets represented by U.S. Treasury bonds. The SEC's approval of YLDS further indicates that regulatory agencies have now given the green light for interest-bearing stablecoins similar to U.S. Treasury bonds, which will undoubtedly attract more projects to launch similar products in the future.

Conclusion

The approval of YLDS is not only a regulatory breakthrough for crypto innovation but also a milestone in the democratization of finance. 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 to avoid repeating past mistakes. Only in this way can interest-bearing stablecoins truly achieve the goal of benefiting more people.