Figure Markets Launches YLDS, A U.S.-Regulated Yield-Bearing Stablecoin

Figure Markets has introduced YLDS, the first U.S.-regulated yield-bearing stablecoin, allowing users to earn interest on their holdings. This development represents a significant milestone in the evolving regulatory landscape for stablecoins, signaling a potential shift in how these digital assets are perceived by regulators.

As authorities worldwide advance their regulatory frameworks, the approval of YLDS highlights the increasing focus on stablecoins. Regions such as the European Union, Hong Kong, and Singapore are taking steps to establish clear guidelines, reinforcing the legitimacy of these digital assets.

YLDS Gains Approval As Regulators Focus On Stablecoin Rules

YLDS, a dollar-pegged stablecoin that includes an additional yield component, delivers 3.85% APR to holders. The interest rate matches the Secured Overnight Financing Rate (SOFR), minus 0.50%. Interest accrues daily and gets distributed monthly, giving users the flexibility to obtain payments in either U.S. dollars or additional YLDS tokens.

Commenting on the approval, Mike Cagney, Chief Executive Officer of Figure Markets, said that if he could keep the stablecoin, control it himself, earn interest, and use it for transactions, he would not need a bank.

He added that stablecoins like YLDS, with their low transaction fees, could provide financial sovereignty to individuals and support the movement of money both domestically and internationally.

The approval of YLDS arrives as the stablecoin market expands and regulators worldwide attempt to take steps toward managing this new asset class. In the U.S., legislators are handling a handful of regulatory themes — reserve management, transparency, and integration with traditional financial systems.

A draft bill known as the STABLE Act, introduced by Republican lawmakers French Hill and Bryan Steil, seeks to establish clearer regulatory guidelines for stablecoin issuers. But Timothy Massad, who previously led the Commodity Futures Trading Commission, views the draft as a useful beginning that nonetheless lacks some critical aspects.

He criticized it as “substantially weaker than what was negotiated between the former committee chair and the ranking member last fall.”

YLDS Offers Higher Returns Amid Changing Market Conditions

At 3.85% APR, YLDS stands as a strong alternative to traditional fixed-income products. For example, although it remains below the average high-yield savings account rate of 4.75 percent, it surpasses U.S. Treasury bonds.

Currently, 10-year Treasury notes offer about 2.89 percent, while 30-year bonds provide an average of 3.24 percent. In today’s market, this proves compelling for many, as investors’ incomes become more difficult to secure on lower-yielding assets.

This could have a tangible effect on people’s lives, particularly retirees on fixed incomes. They rely on interest income to combine with social security or a pension.

It really depends on bond yields and interest rates on savings accounts — if they drop too low, then these people will likely have to deplete their principal, which could threaten their long-term financial stability. A marginally higher yield from YLDS or a stablecoin might allow them to maintain their standard of living without drawing down their savings.