The yield-bearing stablecoin market has shown strong growth in recent years. While retail investors have not shown significant interest, the latest data reveals substantial potential in this sector.
This article explores the challenges faced by the yield-bearing stablecoin sector amid changing regulatory environments and increasing institutional interest.
Yield-Bearing Stablecoin Market Cap to Exceed $10 Billion in 2025
Yield-bearing stablecoins differ from traditional stablecoins by not only maintaining a stable value but also providing returns to holders. These yields come from strategies such as staking, lending, or investing in income-generating assets like government bonds.
According to Stablewatch, the total supply of yield-bearing stablecoins has increased 13-fold in less than two years, rising from $666 million in August 2023 to $8.98 billion in May 2025. In February 2025, the market reached an all-time high of $10.8 billion.
Stablewatch also reports that total cumulative yield payouts have reached nearly $600 million, with current average daily payouts around $1.5 million.
Notable projects like Ethena's sUSDe and Sky's sUSDS and sDAI are leading the market, accounting for 57% of the total yield-bearing stablecoin market cap, approximately $5.13 billion.
According to defillama, the market currently has over 1,900 stablecoin pools distributed across 465 protocols and more than 100 chains, allowing investors to deposit stablecoins and earn yields.
Despite impressive growth, Jacek Czarnecki, co-founder of L2Beat, points out that yield-bearing stablecoins still represent only a small portion of the broader stablecoin market. At the time of writing, the total stablecoin market cap exceeded $244 billion.
"Yield-first stablecoins represent only a small portion (3.7%) of the general stablecoin market." – Jacek Czarnecki, Co-founder of L2Beat
Nevertheless, this small percentage reflects the enormous growth potential of yield-bearing stablecoins. More investors are now seeking passive income opportunities in the DeFi space.
Challenges in the Yield-Bearing Stablecoin Sector
According to Jacek Czarnecki, yield-bearing stablecoins still lack a standardized definition. This lack of clarity makes it difficult to classify and evaluate these assets.
Jacek categorizes stablecoins into two groups: payment and yield-bearing. Simple as it may be, this distinction could help form dedicated legal frameworks for each type.
"Stablecoins are widely recognized as a breakthrough in cryptocurrency. However, to expand, a user-centric framework is needed. You shouldn't buy coffee from a yield vault. Combining both types into one category (as many dashboards do) is like storing your salary in a hedge fund: technically possible, but not very meaningful." – Jacek Czarnecki, Co-founder of L2Beat
Legislators are beginning to recognize this distinction. For example, the U.S. GENIUS Act specifies that stablecoins providing yields or interest are not considered "payment stablecoins".
This means these stablecoins would be excluded from the bill's regulatory scope and could instead be classified as securities under SEC oversight.
Meanwhile, the European Union's MiCA (Markets in Crypto-Assets) completely prohibits interest payments on stablecoins. The regulatory ambiguity and legal restrictions have so far prevented the yield-bearing stablecoin market from fully taking off, currently attracting mainly insiders and early investors.
However, major financial institutions' participation in the stablecoin sector suggests legislators might adopt a more flexible stance. To maintain momentum and ensure sustainability, projects must address key regulatory, transparency, and risk management issues.
