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| By Marija Matic |
The stablecoin market is on fire right now! Year over year, it’s up a whopping 47%!
And in a recent welcome development, the SEC has finally given us clarity: Basic "covered stablecoins" — like USD Coin (USDC) and Tether (USDT) — aren't securities when they maintain a 1:1 dollar value, offer 1:1 redemption and are backed by low-risk assets.
It’s no wonder even TradFi giants like PayPal (PYPL) are jumping in this sector.
But not all stablecoins are created equal.
The Stablecoin Sector’s Next Big Thing
While Americans can freely use regular stablecoins in DeFi strategies, the SEC's definition specifically excludes the innovative “yield-bearing stablecoins” that are taking the global market by storm.
What exactly are these yield-bearing stablecoins?
Think of them as dollar-pegged tokens with built-in APY generators. They create income through lending, trading, staking or holding real-world assets like U.S. Treasury bonds.
Some automatically grow your balance while sitting in your wallet, while others require basic staking to unlock their potential.
Either way, they offer a more streamlined earning approach compared to some traditional DeFi strategies.
According to Bybit data, yield-bearing stablecoins have seen a mind-blowing 583% market cap increase in 2024 alone. The top five tokens now make up 6% of the total stablecoin market, exceeding $13 billion.
Global Stars Reshaping Finance
While not all yield-bearing stablecoins offer the same yield, revenue mechanism or risk profile, the global market has embraced several standout ones.
Some of those are:
- USDe by Ethena Finance: One of the market leaders with a massive $4.78B market cap. Users stake USDe to earn a solid 4.68% APY. Ethena's clever approach to dollar stability uses staked ETH and BTC in delta-hedging strategies, earning primarily from short positions, collecting funding rates. When combined with Pendle strategies, yields can jump above 8%.
- USDY by Ondo: Sitting at a respectable $600M market cap, this T-bill-backed stablecoin shares yields directly with holders. The current 5% interest rate is built right into the token itself, with the price gradually increasing over time:
- USDM by Mountain Protocol: This smaller $48M market cap stablecoin — regulated in Bermuda and also backed by U.S. Treasury bills — uses a rebasing approach where the number of tokens in the holder’s wallet increases daily to reflect earned yield. It currently offers 3.8% APY.
If you live outside the U.S., this is a veritable buffet of delicious, delta-neutral opportunities.
That means your capital is exposed to minimal risk … all while you earn rewards.
But due to current regulation, U.S. residents can’t join any of these opportunities.
The ripple effects go beyond just missing the specific tokens. Many cutting-edge DeFi platforms that added yield-bearing stablecoins now warn U.S. residents away in their Terms of Service. A few of them even go so far as to block U.S.-based IP addresses on an interface level, which makes their other services inaccessible.
This regulatory divide is creating a two-tier global crypto ecosystem, with many of us locked out of finance's newest innovations.
But that may not be the case forever.
A Glimmer of Potential Change
There are some signs that regulations may eventually evolve.
Not only has President Trump mentioned his interest in stablecoin legislation. Industry leaders like Coinbase CEO Brian Armstrong continue to advocate specifically for U.S. access to the yield-bearing opportunities of these new stablecoins.
In fact, there are currently two bills — the STABLE Act and the GENIUS Act — making their way through Congressional committees.
Meanwhile, innovation continues at full speed globally. Next-gen stablecoins will likely explore features that allow users to select yield strategies or blend risk profiles in a single token.
These developments will show what might be possible if regulatory frameworks can adapt.
Max Out Your Stablecoin Yield … Within Regulation!
And in the meantime, U.S. residents can still focus on old-school stablecoins, like USDC and USDT, to target solid yields, regardless of market volatility.
Platforms like Orca, Jupiter, Cetus and other decentralized exchanges offer appealing yields for your stablecoin deposits.
In fact, my Crypto Yield Hunter Members have two such positions that boast roughly 9% APY each — which outpaces some of those top yield-bearing stablecoins I mentioned earlier!
Even better, yield is paid out in stablecoins as well, so the value of your rewards is locked in.
When this rally runs out of fuel and downside volatility returns, you may want to consider a delta-neutral stablecoin strategy to squeeze as much value as you can out of a slower market.
Best,
Marija Matić
