JPMorgan analysts predict stablecoin yields growth up to 50%
JPMorgan warns stablecoin growth could threaten traditional banking.
Yield‑bearing stablecoins — digital tokens backed by U.S. Treasurys that pay interest — could expand from 6% to as much as 50% of the stablecoin market cap within a year, according to JPMorgan analysts.
Combined market capitalization of the top five yield‑bearing stablecoins has tripled since November, rising from $4 billion to over $13 billion, reports The Block.
Key Takeaways
- Rapid Expansion: Yield‑bearing stablecoins grew 225% since November 2024, but still comprise only 6% of the $225 billion stablecoin market.
- Top Performers: Ethena’s USDe, Sky Dollar’s USDS, BlackRock’s BUIDL, Usual Protocol’s USD0 and Ondo’s USDY lead with combined market cap exceeding $13 billion.
- Regulatory Catalyst: SEC approval of Figure Markets’ YLDS — the first yield‑bearing stablecoin registered as a security — adds momentum to the segment.
- Liquidity Gap: Traditional non‑yielding stablecoins hold a liquidity advantage, but analysts expect yield tokens to capture idle cash as collateral demand rises.
Drivers of Yield‑Bearing Growth
JPMorgan managing director Nikolaos Panigirtzoglou identifies several factors fueling demand for yield‑bearing stablecoins: guaranteed interest returns without relinquishing custody, acceptance as collateral on major trading platforms like Deribit and FalconX, and their use in DeFi protocols seeking higher yields amid declining decentralized finance returns. Projects such as Frax Finance are increasingly integrating tokenized Treasurys into their protocols, further broadening adoption.
Regulatory Hurdles and Market Dynamics
Unlike Tether’s USDT and Circle’s USDC, which avoid paying interest to maintain money‑market status, yield‑bearing stablecoins are classified as securities — subject to stricter compliance requirements.
This regulatory designation limits retail accessibility and constrains liquidity. Nevertheless, with stablecoin market cap at roughly $220 billion, JPMorgan analysts argue that yield products could gradually siphon off a substantial portion of idle cash, particularly for institutional collateral, DAO treasuries, and liquidity pools.
Loading...
Outlook: From Niche to Mainstream
While traditional stablecoins currently dominate transaction volume due to their low cost and high liquidity, the growing integration of tokenized Treasurys into both centralized and decentralized finance suggests yield‑bearing stablecoins are on the cusp of mainstream adoption.
JPMorgan projects these instruments could command up to half of the stablecoin market absent regulatory impediments — a shift that would reshape how crypto investors and institutions allocate capital in digital markets.
Recently we wrote, that Tether CEO Paolo Ardoino has proclaimed the start of a new era in the digital asset space—what he calls the “stablecoin multiverse”.
