Figure’s (Nasdaq: FIGR) YLDS, a digital asset that is a security, is now accepted as collateral on EDX Markets, an institutional crypto trading platform.
YLDS, a regulated yield-bearing security, gives institutions flexibility to manage capital.
EDX also said it will adopt YLDS as a treasury asset on its balance sheet.
Figure founder and Executive Chairman Mike Cagney said in a release that collateral was one of the first use cases they identified when launching YLDS.
“Institutions shouldn’t have to choose between yield, liquidity and regulatory certainty, and with YLDS they don’t. We see this as another step in the broader migration of traditional finance onto blockchain, and we’re excited to build that infrastructure alongside EDX.”
YLDS is an SEC-registered fixed-income debt security that transfers on-chain. While providing yield, around 3.3%, it is designed to hold its value as it is pegged to the US dollar. Each YLDS certificate has a fixed value of $0.01, so 100 certificates equal one dollar. Because stablecoin yield is a major issue for the banking sector, and banks have fought to ensure dollar-based stablecoins are not used to generate interest or yield, YLDS provides a workaround because it is deemed a security.
YLDS is a good example of how the technology removes intrinsic friction to generate value in capital markets.
YLDS declares on its website that it is “Exempt from the yield prohibition in the GENIUS Act and further restrictions expected in the CLARITY Act.”
YLDS currently has a market value of over $677 million.
Cagney posted on X that he believes more exchanges will follow EDX’s lead.
“Traders sacrifice a lot in taking the cash drag from posting non-yielding stables as collateral. The reason this has taken longer than we expected is that we didn’t account for the fact that the other large stablecoin issuers pay the exchanges to take their coins as collateral. YLDS pays you, the trader. I think EDX as a first mover will open up this market more broadly to the benefit of all traders.”