Yield Stablecoins Are the Future, Says JPMorgan

Yield-bearing stablecoins are quickly emerging as the next big thing in the crypto ecosystem. Offering interest returns similar to traditional financial products, these assets have captured attention from investors, institutions, and now major banks. According to JPMorgan , yield-bearing stablecoins could grow from just 6% of the stablecoin market to as much as 50%, provided regulatory developments don’t slow their momentum. With the recent explosion in market cap and use cases, is this the beginning of a stablecoin revolution?

Why Are Yield-Bearing Stablecoins Gaining Traction?

As reported , JPMorgan analysts, led by Nikolaos Panigirtzoglou, highlight several reasons behind the rise. Unlike traditional stablecoins like USDT and USDC , which don’t share reserve yields with users, yield-bearing stablecoins offer passive income—without the risks of lending, trading, or giving up custody.

The top five players in this space — Ethena's USDe, Sky Dollar's USDS, BlackRock's BUIDL, Usual Protocol's USD0, and Ondo Finance's USDY — have seen combined market caps rise from $4 billion to over $13 billion since November 2024. This growth shows no sign of slowing.

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What Role Do Tokenized Treasurys Play?

A major catalyst has been the adoption of tokenized Treasurys, which behave like digital versions of government bonds. These instruments provide yield and are now accepted as collateral on trading platforms like Deribit and FalconX. This means traders can post them as collateral and still earn yield — a win-win scenario.

In DeFi, declining returns on traditional platforms have pushed users toward tokenized Treasurys. Even projects like Frax Finance are integrating these assets, proving they’re more than just hype — they’re becoming infrastructure.

Will Regulation Slow the Momentum?

Regulation remains a double-edged sword. Yield-bearing stablecoins are often classified as securities, meaning they must comply with stricter laws. This adds friction, especially for retail investors. However, the SEC’s recent approval of Figure Markets’ yield-bearing stablecoin, YLDS, as a registered security, suggests a pathway forward.

Traditional stablecoins still have the liquidity edge, with a $220 billion market cap and wide use across exchanges and blockchains. Their speed and low-cost transactions remain a barrier to yield-bearing stablecoins, which are newer and less liquid.

Can Yield-Bearing Stablecoins Catch Up?

According to JPMorgan, yes—over time. These coins could become the preferred form of collateral in crypto derivatives, DAO treasuries, and venture fund reserves. As they gain traction, the current liquidity disadvantage may fade.

Idle capital currently sitting in traditional stablecoins could flow into yield-bearing alternatives, especially as more institutions seek capital efficiency. While this shift won’t happen overnight, the signs point to a gradual but powerful transformation in how capital moves in crypto.

Read this article>> Bitcoin or Stablecoins: Which Is the Best to Hold in 2025? <<

What’s the Market Outlook?

If the trend continues and regulatory clarity improves, JPMorgan’s projection of 50% market share for yield-bearing stablecoins is not just bold — it’s realistic. With investors demanding both stability and returns, these new stablecoins are well-positioned to disrupt a market long dominated by yieldless tokens.

As crypto evolves toward a more institutional future, yield-bearing stablecoins might just become the default standard.