The US Securities and Exchange Commission has approved an application from Figure Markets for a yield-bearing stablecoin that will allow users to earn interest payments on their holdings — signaling the regulator’s intent to accommodate the rapidly growing stablecoin market.
According to regulatory filings that appeared on the SEC’s website on Feb. 18, exchange operator Figure Markets got the green light to launch its US dollar-pegged YLDS stablecoin. Currently, YLDS offers holders a yield of 3.85% and is registered as a security with the SEC.
Figure Markets CEO Mike Cagney told Fortune that the application was submitted to the SEC more than one year ago.
“If I can hold this [stablecoin], 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.
Figure’s original application with the SEC. Source: SEC
Although Figure Markets is the first company to be approved for a yield-bearing stablecoin in the US, it’s not the only player going down the route. As Cointelegraph recently reported, Tether co-founder Reeve Collins plans to launch a decentralized stablecoin that offers interest in the second half of the year.
Collins’ forthcoming Pi Protocol will allow users to mint a stablecoin in exchange for a yield-bearing token.
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Stablecoin regulation takes center stage
The stablecoin market is proliferating at a time when US lawmakers have prioritized creating industry-friendly regulations for the emerging asset class.
As S&P Global recently noted, US regulators are grappling with various regulatory themes regarding stablecoins, including reserve management and transparency, integration with traditional financial systems and jurisdictional fragmentation.
The European Union, Hong Kong and Singapore have made progress in creating a comprehensive approach to stablecoins, while the US has lagged behind.
The explosive growth of stablecoins (highlighted in orange) has forced regulators all over the globe to come to terms with this new asset class. Source: S&P Global
On Feb. 5, Republican lawmakers French Hill and Bryan Steil presented a draft version of the STABLE Act, which intends to provide clearer regulatory guidance for stablecoin issuers. Former Commodity Futures Trading Commission Chair Timothy Massad said the draft is a good first stab but still misses the mark on several important themes.
“The STABLE Act has many features I support, such as full reserves for tokens, limitations on the activities of an issuer, but there are many areas where it is deficient,” Massad told a Feb. 11 subcommittee hearing in Washington, DC.
Former CFTC Chair Timothy Massad raised several issues with the STABLE Act and said the proposed legislation wouldn’t “have much impact on Tether,” the world’s largest stablecoin issuer. Source: GOP Financial Services
The proposal “is substantially weaker than what was negotiated between the former committee chair and the ranking member last fall,” said Massad.
Related: Multicurrency is the future of stablecoins, says former Binance.US exec