The Securities and Exchange Commission (SEC) has approved the first interest-bearing stablecoin registered as a security in the United States.
The Securities and Exchange Commission (SEC) has approved the first interest-bearing stablecoin registered as a security in the United States. Figure Markets’ YLDS stablecoin, pegged to the U.S. dollar, offers a 3.85% yield and operates under SEC oversight. Unlike major stablecoins such as Tether (USDT) and USD Coin (USDC), which generate interest from reserves but do not distribute it to holders, YLDS allows users to earn daily interest while maintaining liquidity. Figure Markets CEO Mike Cagney sees this as a major shift in financial services, questioning the need for traditional banks when digital assets can provide similar benefits.
Issued by Figure Certificate Company, a subsidiary of Figure Markets, YLDS requires users to complete a Know Your Customer (KYC) process to earn interest. Transfers to users who have not completed KYC are permitted, but those users will not receive interest. The stablecoin is backed by assets similar to prime money market funds, with its yield tied to the Secured Overnight Financing Rate (SOFR) minus 0.50%. Users can redeem YLDS for U.S. dollars or other stablecoins and access fiat off-ramps during U.S. banking hours. The stablecoin operates on the Provenance Blockchain and aims to be a compliant alternative to offshore stablecoins.
On the same day as the approval, the SEC launched the Cyber and Emerging Technologies Unit (CETU), replacing its Crypto Assets and Cyber Unit. The new division, led by Laura D’Allaird, will focus on fraud linked to AI, blockchain, and social media scams. CETU will coordinate with the Crypto Task Force to track fraudulent activities, investigate hacking incidents, and monitor AI-driven financial schemes.
The approval of YLDS comes amid growing regulatory attention on stablecoins. The U.S. has lagged behind other regions, such as the EU, Hong Kong, and Singapore, in establishing clear rules for stablecoin issuers. However, on Feb. 5, Republican Representatives French Hill and Bryan Steil introduced a draft of the STABLE Act to set guidelines for the industry. During a Feb. 11 congressional hearing, former CFTC Chair Timothy Massad supported aspects of the bill, such as full reserves and issuer restrictions, but argued that it lacked clarity in key areas.
Stablecoins now have a market capitalization exceeding $230 billion, with Tether leading at over $140 billion, and USDC at $56 billion. These stablecoins generate billions in interest from reserves without passing earnings to holders. YLDS, as a regulated yield-bearing alternative, could set a precedent for others. Tether co-founder Reeve Collins has also announced plans for Pi Protocol, a decentralized stablecoin offering interest, expected to launch later this year.
Cagney envisions YLDS being used for exchange collateral, cross-border transactions, and payment networks. While Figure Markets has not disclosed user sign-ups, Cagney expects strong demand, emphasizing YLDS as a compliant, transparent alternative to unregulated stablecoins. The stablecoin will initially be available to verified users, with broader access in the coming weeks.
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