SEC approves first interest-bearing stablecoin, YLDS, with 0.5% yield

The Securities and Exchange Commission (SEC) has approved YLDS, making it the first-ever interest-bearing stablecoin registered as a security in the United States, according to a report from Fortune.

The YLDS stablecoin, launched by Figure Markets, will be pegged to the US dollar and offer users a 0.5% yield, which puts it in direct competition with Tether (USDT) and USD Coin (USDC).

YLDS is reportedly fully compliant with the SEC’s regulations, a detail that CEO Mike Cagney says gives it a clear legal advantage over USDC and USDT.

“We think this is a hugely transformative play. 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?”

Figure’s SEC win comes after a year

Figure filed its application over a year ago, betting that a yield-generating, regulator-approved stablecoin could change the industry. The timing is pretty important, too, as the total market cap of stablecoins has surged past $225 billion, according to DefiLlama, more than doubling since the last crypto bear market.

But while demand is high, most stablecoins exist in a legal gray zone. Tether leads the pack, with a market cap of over $140 billion, and USDC follows at $56 billion. Both rely on US Treasury reserves to generate billions in interest, yet neither pays holders a single cent.

Figure’s stablecoin is the first of its kind to be structured as a security. That means it will be regulated like stocks and bonds, requiring full SEC oversight.

Users who want to earn the 0.5% yield must complete a Know-Your-Customer (KYC) process. If YLDS is transferred to someone who hasn’t completed KYC, they can hold the stablecoin but won’t receive the interest.

While Figure has not disclosed how many users have signed up, Cagney said he expects strong demand. The company plans to launch YLDS later today, making it available first to users who pass the identity verification process.

Cagney also pointed out the risks tied to unregulated stablecoins. “There’s a lot of skepticism about the ability for them to support withdrawals,” he said, referring to offshore stablecoins that have faced liquidity concerns.

SEC launches a new fraud unit

On the same day YLDS got approved, the SEC announced a new enforcement division focused on cyber and emerging technologies. The Cyber and Emerging Technologies Unit (CETU) will replace the Crypto Assets and Cyber Unit, following through with its promised change in how the agency plans to regulate fintech.

Laura D’Allaird, the new unit’s chief, will oversee a team of 30 attorneys and fraud specialists spread across multiple SEC offices. Their focus is tracking and prosecuting fraud in blockchain, AI, and social media-driven scams.

“Under Laura’s leadership, this new unit will complement the work of the Crypto Task Force led by Commissioner Hester Peirce,” said SEC Acting Chairman Mark Uyeda.

In its official statement, the SEC outlined key priorities for CETU, which are Cracking down on fraud tied to AI and machine learning, investigating crypto scams that use social media and fake websites, going after hackers who leak insider financial data, as well as protecting retail investors from fraudulent tokens and Ponzi schemes.

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