SEC Approves First Interest-Bearing Stablecoin YLDS from Figure Markets

The U.S. Securities and Exchange Commission (SEC) has given the green light to Figure Markets’ YLDS, a stablecoin that pays daily interest. This marks a first in the crypto industry, as YLDS is officially registered as a security. The approval signals a shift in the regulatory landscape, setting new standards for digital assets.

YLDS Breaks New Ground with SEC Approval

Stablecoins have long been a cornerstone of crypto transactions, offering price stability in an otherwise volatile market. But unlike USDT or USDC, YLDS isn’t just another dollar-pegged token—it pays users 0.5% in daily yield. That’s a fundamental shift in how stablecoins operate, blurring the line between digital currency and investment security.

Figure Markets CEO Mike Cagney sees the SEC’s approval as a pivotal moment, one that raises tough questions for traditional banks. “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?” Cagney told Fortune.

Regulatory clarity has been a long-standing issue in crypto, with many projects caught in legal limbo. YLDS changes that. Its SEC registration means it falls under the same financial umbrella as stocks and bonds, giving it a level of legitimacy that most stablecoins lack.

Stablecoin Market Hits $225 Billion as Institutional Interest Grows

The approval of YLDS comes at a time when stablecoins are experiencing a resurgence. After slumping during the crypto winter, stablecoin market capitalization has rebounded to $225 billion, according to DeFiLlama.

• Stablecoins act as digital dollars, facilitating trading and DeFi transactions.
• Traditional financial institutions are increasingly integrating stablecoins for global payments.
• Tether (USDT) remains dominant, but regulatory concerns persist.

Despite their popularity, most stablecoins don’t share the interest they generate. Tether, for instance, made an estimated $13 billion in 2024 from investments—but holders saw none of that profit. That’s where YLDS aims to stand out, distributing yield directly to its users.

YLDS Offers 0.5% Daily Yield, Setting It Apart from Rivals

For those holding YLDS, the 0.5% daily yield is an enticing feature. Compare that to Tether, which keeps all interest earnings for itself. The difference is stark, and it positions YLDS as a potential disruptor.

Yearly, that yield could add up to significant returns. If sustained, a $1,000 YLDS balance could generate over $1,800 in interest within a year. While such rates may fluctuate, the appeal is clear: stable income from a stablecoin.

There’s precedent for yield-bearing stablecoins, but many have operated in regulatory gray areas. The SEC previously cracked down on Binance’s stablecoin before dropping the case in 2024. With YLDS, Figure Markets is taking the compliance-first approach, hoping to win over institutions wary of legal uncertainty.

KYC Becomes a Must for Earning Interest

Not everyone holding YLDS will receive interest. Figure Markets has implemented Know Your Customer (KYC) requirements, meaning users must verify their identity to earn the 0.5% daily yield.

• Verified users will receive their yield automatically.
• Unverified holders can still use YLDS for transactions but won’t get paid interest.
• The approach aligns with SEC regulations and could set a precedent for future stablecoins.

KYC has long been a contentious issue in crypto, where privacy concerns often clash with regulatory demands. But for YLDS, the trade-off is clear: regulatory approval in exchange for tighter controls on who benefits.

What’s Next for Yield-Bearing Stablecoins?

YLDS isn’t launching in a vacuum. Competitors like Ripple and PayPal are rolling out their own stablecoins, each with different features and target markets. However, Figure’s SEC approval gives YLDS an edge in terms of legitimacy and compliance.

This raises the question: will major stablecoin issuers like Tether and Circle follow suit? So far, they’ve resisted registering with the SEC, arguing that stablecoins are more akin to cash than securities. But with YLDS setting a new precedent, regulatory pressure may push them toward similar models.

For now, YLDS represents an experiment—one that could redefine how digital dollars work. Whether it succeeds or not, its approval is a clear sign that stablecoins are evolving, and regulators are paying closer attention than ever.