SEC Approves Yield-Bearing Stablecoin as Crypto Regulations Evolves

SEC approved a yield-bearing stablecoin, introducing a new era for crypto stablecoins. The asset class is an important aspect of the crypto market that facilitates billions of daily transactions.

However, they have traditionally lacked yield, forcing investors to forgo returns in exchange for price stability. That has now changed after the U.S. Securities and Exchange Commission (SEC) approved the first yield-bearing stablecoin, Bloomberg reported.

A Stablecoin That Pays Interest

Earlier this week, the SEC approved securities from Figure Certificate Co., allowing the company to offer a yield-bearing stablecoin known as YLDs. Unlike traditional stablecoins, which earn issuers revenue but provide no direct returns to holders, YLDs will generate yield by investing reserves in securities such as U.S. Treasuries and commercial paper.

The SEC has classified YLDs stablecoins as “certificates,” making them subject to securities regulations. This sets them apart from other major stablecoins like Tether’s USDT, which does not offer yield to users despite earning billions in reserve income.

Introducing the first-ever SEC-regulated, yield-bearing stablecoin: $YLDS✅Risk-free yield at SOFR - 50bps (3.85%)✅No staking or lockups✅Buy/sell 24x7It’s time for real assets with real value. pic.twitter.com/Vt1Ilw5jGv

Figure Markets expects YLDs to compete with existing stablecoins in key applications such as payments, cross-border transfers, and collateralized lending. Its primary rivals include Tether, which remains the dominant player in the stablecoin market, and BlackRock’s BUIDL, a fund-backed stablecoin designed for institutional investors.

Interest in yield-bearing stablecoins is heating up. A Tether co-founder recently announced plans to launch a similar product, highlighting the growing recognition of investor demand for passive income on digital assets.

Regulatory Support and Future Outlook

Figure Markets began the approval process in August 2023 by filing a confidential S-1 with the SEC. Under then-Chairman Gary Gensler, the company navigated the regulatory landscape and ultimately secured approval. This regulatory nod may set the stage for more yield-bearing stablecoins, though experts estimate that additional SEC approvals could take six to 12 months.

Stablecoins have received increased attention from U.S. policymakers. The Trump administration’s recent executive order on digital assets included support for the growth of dollar-backed stablecoins, signaling further regulatory clarity. Meanwhile, Congress continues to develop stablecoin legislation, which could create a formalized framework for these assets.

With regulatory approval in hand and competition intensifying, the emergence of yield-bearing stablecoins could reshape the crypto market, providing investors with new ways to earn passive income while maintaining price stability.