SEC Approves First Yield-Bearing Stablecoin, Ushering in Crypto’s Next Era

In a groundbreaking move, the U.S. Securities and Exchange Commission (SEC) has approved the first-ever yield-bearing stablecoin classified as a security. Developed by Figure Markets, the newly approved stablecoin, YLDS, is pegged to the U.S. dollar and offers an annual yield of 3.85%. This decision represents a major step forward in integrating blockchain-based financial products with traditional finance.

A New Era for Stablecoins

The approval, announced on February 20, 2025, allows YLDS holders to earn interest at a rate based on the Secured Overnight Financing Rate (SOFR), minus 0.50%. With SOFR currently at 4.35%, YLDS offers a yield of 3.85% per year. Interest accrues daily and is paid out monthly, either in U.S. dollars or additional YLDS tokens.

Investors can trade YLDS 24/7 using U.S. dollars or other stablecoins through Figure Markets, with the option to convert back to fiat during U.S. banking hours. This structure provides both liquidity and a reliable return, making it an attractive alternative to traditional savings accounts and other interest-bearing financial instruments.

Regulatory Significance and Market Impact

The SEC’s decision comes amid a rapidly growing stablecoin market, now valued at over $230 billion. By approving a yield-bearing stablecoin as a security, the agency signals a willingness to regulate and integrate crypto assets into the broader financial system while maintaining investor protections.

“This approval is a game-changer for digital assets,” said Mike Cagney, CEO of Figure Markets. “If I can hold this stablecoin, manage it myself, earn interest, and use it for transactions, then why do I need a bank?” His statement underscores the transformative potential of blockchain-based finance and its ability to challenge traditional banking models.

Unlike popular stablecoins such as Tether (USDT) and USD Coin (USDC), which do not distribute reserve yields to holders, YLDS introduces a new model that directly benefits users. This could set a precedent for other stablecoin issuers, potentially pushing the market toward more investor-friendly offerings.

A Step Toward Greater Regulatory Clarity

The SEC’s approval of YLDS marks a significant shift toward regulatory oversight in the crypto space. It provides a framework for future yield-bearing digital assets and could encourage more companies to pursue compliant, blockchain-based financial products.

This development aligns with global efforts to regulate stablecoins, as jurisdictions such as the European Union, Hong Kong, and Singapore have already taken steps to introduce structured oversight for digital asset markets. The SEC’s decision is expected to influence both U.S. and international policies regarding stablecoins and digital securities.

The Future of Yield-Bearing Digital Assets

With regulatory clarity now in place, the approval of YLDS could pave the way for further innovation in the stablecoin market. Financial institutions and fintech firms may explore similar models, offering new opportunities for investors seeking safe and yield-generating crypto assets.

As blockchain technology continues to merge with traditional finance, products like YLDS highlight the potential for compliant, decentralized financial solutions that offer both stability and returns. The SEC’s approval sets a precedent that could reshape the stablecoin landscape, driving the evolution of crypto-based financial products in the years ahead.