The U.S. Securities and Exchange Commission (SEC) has approved an interest-bearing stablecoin, granting Figure Markets the authority to launch YLDS. The SEC classifies YLDS as a security, distinguishing it from other stablecoins like Tether (USDT) and USD Coin (USDC). Interestingly, the approval marks the crypto as the first registered yield-bearing stablecoin.
Yield-Bearing Stablecoin. How?
A stablecoin is a cryptocurrency designed to maintain a stable value relative to a fiat currency (such as the US dollar) or a commodity (like gold). It aims to reduce the price volatility typically associated with other digital assets like Bitcoin and Ether.
Unlike traditional stablecoins, YLDS offers a yield similar to cash in a savings account. The rate is currently set at 3.85%, and it adjusts based on market conditions. The SEC’s approval comes more than a year after Figure Markets initially filed its application. It could encourage more yield-bearing stablecoins to enter the market, providing a compliant alternative to existing options.
Figure Markets CEO Mike Cagney claims the token is innovative and challenges the role of conventional banking. He further questioned the necessity of traditional financial institutions in a world where digital assets can generate returns while maintaining liquidity. In an interview with media outlet Fortune, he said:
“If I can hold this, if I can self-custody this, if it pays me interest, and I can actually use it to transact, what do I need a bank for?”
Nonetheless, while Figure Markets’ YLDS is the first SEC-approved yield-bearing stablecoin, it is not the first attempt to introduce a stablecoin with built-in returns. One of the most infamous examples is Terraform Lab’s TerraUSD (UST), an algorithmic stablecoin that promised high yields, offering a 20% annual return.
U.S. Becomes More Crypto-Friendly
The SEC is taking a more progressive approach to crypto regulation, shifting away from its stance under former Chair Gary Gensler. This change aligns with recent remarks from Binance CEO Richard Teng, who highlighted improved regulations.
The regulator is now targeting fraud and investor protection by creating a specialized Cyber Unit to combat crypto-related scams. The financial watchdog also recently withdrew its appeal on the broker-dealer rule, showing its willingness to reconsider its regulatory framework.
Another development is the SEC’s growing interest in crypto staking, which was previously under attack during Gensler’s tenure. Journalist Eleanor Terrett recently reported that the agency is now evaluating ways to integrate staking into a regulated financial framework rather than outright banning it.
