The US has enacted the GENIUS Act, a stablecoin law that creates a regulatory framework for dollar-pegged cryptocurrencies, which has fueled interest in stablecoins.
However, despite tokenization making transactions cheaper and faster, institutional investors have remained wary, largely due to the absence of clear risk criteria.
Why is it important?
Unlike traditional finance, where capital regularly earns interest, most crypto assets provide no return other than an increase in their prices. Yield-bearing crypto assets could unlock significant funding and encourage large financial firms to enter the space as regulations improve.
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The world of cryptocurrencies is very dynamic. Prices can go up or down in a matter of seconds. Thus, having reliable answers to such questions is crucial for investors.
by number
The market size of interest-bearing stablecoins has grown by 300% in the past year as new projects have emerged to compete with Tether and Circle, the report said.
“Yield-generating assets make up only 8% to 11% of crypto, compared to 55% to 65% of traditional finance,” showing how crypto’s yield infrastructure remains underdeveloped, the report said.
While the total market capitalization of crypto was about $3.55 trillion, only $300 billion to $400 billion of those assets generated any yield, the report added.
This gap is crypto’s “biggest opportunity,” the report said.
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