Great for Crypto? – CryptoNinjas

Key Takeaways:

• YLDS being the first SEC-approved yield-bearing stablecoin provides a stable yield of 3.85% APR.
• YLDS holders can also earn interest on their holdings, with monthly payouts in either USD or YLDS.
• This approval from the SEC reflects its ever-growing acceptance of the fast-growing stablecoin market.

Figure Markets is the first U.S.-regulated firm to launch a yield-bearing stablecoin, YLDS, allowing users to earn interest on their balances. This marks a significant step in the evolving regulatory landscape for stablecoins. This indicates a possible regulatory sea change, whereby the burgeoning market for stablecoins might be viewed more favorably. However, the SEC isn’t the only jurisdiction to move to regulate stablecoins, with both the European Union and Hong Kong and Singapore making strides toward a comprehensive approach.

What is YLDS?

YLDS, a dollar-pegged stablecoin that offers an additional yield component, provides 3.85% APR to holders. The interest rate is equal to the Secured Overnight Financing Rate (SOFR), minus 0.50%. Interest compounds daily and is paid out monthly, giving users the flexibility to receive payments in either U.S. dollars or additional YLDS tokens.

Commenting on the approval, Mike Cagney, CEO of Figure Markets, said: “If I can hold this stablecoin, manage it myself, earn interest, and use it for transactions, then why do I need a bank?”. Stablecoins, like YLDS with their low transaction fees, also have the potential to introduce financial sovereignty to individuals and facilitate the movement of money domestically and internationally.

Figure’s application. Source: SEC

Administrative Roadblocks: STABLE Act

The approval of YLDS comes as the stablecoin market is booming and regulators the world over look to take steps toward regulating this new asset class. In the U.S., legislators are wrestling with 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, aims to establish clearer regulatory guidelines for stablecoin issuers. But Timothy Massad, who served as Chairman of the Commodity Futures Trading Commission, argues that the draft is a useful beginning that nonetheless is lacking in some critical respects. He denounced it as “substantially weaker than what was negotiated between the former committee chair and…