The innovative interest-bearing stablecoin YLDS has been approved by the SEC and may lead a new direction in the stablecoin market.

Recently, the U.S. Securities and Exchange Commission (SEC) approved the first interest-bearing stablecoin YLDS launched by Figure Markets. This decision not only reflects the regulatory agency'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 space for the stablecoin sector, making it another innovative field capable of attracting large-scale institutional funds after Bitcoin.

Background Analysis of SEC Approval for YLDS

In 2024, a well-known stablecoin issuer's annual profit reached $13.7 billion, surpassing the profit levels of traditional financial giants. These profits mainly came from the investment returns of reserve assets (such as U.S. Treasury bonds), but holders cannot benefit from them. This is precisely the market opportunity that interest-bearing stablecoins are targeting.

The core of interest-bearing stablecoins lies in the "redistribution of asset income rights". While maintaining stability, they allow holders to directly enjoy the benefits by tokenizing the income rights of the underlying assets. This model of "holding coins to earn interest" achieves "democratization of income" and lowers the participation threshold for users.

Although the transfer of underlying asset income affects the profits of the issuing institution, it significantly enhances the attractiveness of interest-bearing stablecoins. In the current environment of global economic instability and high inflation, the demand for financial products that can provide stable returns is growing. Products like YLDS, which are both stable and can offer returns higher than traditional bank interest rates, will undoubtedly be favored by investors.

The key to the SEC's approval of YLDS lies in its compliance with existing securities regulations. Since the United States has not yet established a systematic regulatory framework for stablecoins, regulation is currently 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," thus avoiding regulatory disputes.

YLD distributes the interest income from underlying assets (such as U.S. Treasury bonds and commercial paper) to holders through smart contracts, and binds 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 similar projects in the future.

The Rise of Interest-bearing Stablecoins and Its Impact on the Crypto Market

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

Interest-bearing 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 are expected to attract more institutional investors to incorporate stablecoins into their cash management strategies.

The large-scale influx of institutional funds will drive the interest-bearing stablecoin market to achieve rapid growth. Analysts expect 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 can attract significant institutional attention and capital 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 the process of de-dollarization, the digital on-chain world continues to gravitate towards the dollar. Whether it's the widespread adoption of US dollar stablecoins or the wave of tokenization initiated by Wall Street institutions, the influence of dollar assets in the crypto market continues to strengthen.

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 market's eternal 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 of crypto financial innovation. However, this process must also balance innovation and risk to avoid repeating past mistakes. Only then can interest-bearing stablecoins truly achieve the goal of inclusive finance.