Yield-bearing crypto assets are designed to generate regular income, not just price appreciation.
Introduction—What’s the situation yield-bearing crypto assets?
The cryptocurrency world is currently experiencing a turning point: until there’s complete regulatory clarity, “yield-bearing” assets (i.e., assets that generate interest, returns, or income) haven’t been able to fully develop in the crypto sector. But now, that clarity is emerging, and this field is brimming with possibilities. The report states that: New legislation, the GENIUS Act, has been passed in the US, which brings regulations to bear on dollar-pegged stablecoins. This regulatory clarity could accelerate the growth of yield-bearing crypto assets. According to the report, only a small portion of the total capital in the crypto market currently generates yields, far lower than traditional finance. So let’s take a closer look.
What does “yield-bearing crypto assets” mean?
Before we proceed, it’s important to clarify what “yield-bearing crypto assets” means.
The Meaning of Yield In traditional finance, if you deposit money in a bank, buy bonds, or make other fixed-income investments, you earn interest or income (yield)—meaning your capital is not just dependent on price appreciation, but also generates regular income. This type of “regular income” (or interest-earning) has remained low in the crypto market. Reports indicate that only 8% to 11% of crypto assets are generating yield, compared to 55% to 65% in traditional finance. What are yield-bearing assets like in crypto? They can exist in several forms: Stablecoins, which simply stabilize their price but pay interest on lock-up.
Character programs (lending/borrowing) on DeFi platforms where you can earn income by depositing crypto. Tokenized real-world assets or other digital assets that can generate income. Why are yields low in crypto? There are a few reasons: Many assets in the crypto market rely solely on “price appreciation,” not income generation. There was a lack of regulatory clarity. Investors (especially institutional ones) saw risks in yield-bearing products. Lack of risk metrics and transparency. The report states that institutional investors remain cautious. Thus, “yield-bearing crypto assets” are significant in that they can become a source of regular income, rather than relying solely on capital appreciation.
Current Situation yield-bearing crypto assets
The report provides several important statistics—these data help us understand the size of the opportunity and where improvements are needed. The total capitalization of the crypto market is approximately US$3.55 trillion.
But only US$300 billion to US$400 billion of that capital is invested in yield-generating assets. Regarding stablecoins: The market size of yield-bearing stablecoins has grown nearly threefold in the past year. For example, one report states that yield-bearing stablecoins have reached close to US$11 billion so far, representing approximately 4.5% of the stablecoin market. These figures clearly indicate that the yield-bearing segment of the crypto market still has significant growth potential—the gap is large.
Why is this opportunity growing now? — Analysis of the reasons
Here we will look at the main reasons why “yield-bearing crypto” is now gaining traction and poised for growth. Regulatory clarity: A law called the GENIUS Act was passed in the US, setting the framework for stablecoins. This type of legislation gives investors confidence that future regulations will be clear and risks will be reduced. When regulatory rules are clear, larger financial institutions (banks, asset managers) will be more willing to enter the crypto space. Potential Institutional Adoption: While yield-generating assets are abundant in TradFi, crypto has been scarce. The report states that this gap is “crypto’s biggest opportunity.” Financial institutions prefer yield-generating products because they provide income, not just price appreciation—which is why yield-bearing crypto assets may appeal to them.
Development of Technology and Market-Relevant Platforms DeFi platforms, tokenization, stablecoin infrastructure, etc. are growing. For example, the market share of yield-bearing stablecoins has grown rapidly. As platforms improve, risk management will improve, and investor confidence will grow. Competition and Innovation: Traditional stablecoins (such as USDT, USDC) mostly did not provide yield. Now, new projects are working towards providing yield. Innovations such as “fixed-rate obligations,” “yield tokenization,” “fixed-rate” “D-income DeFi” and others are emerging (also seen in academic research). Thus, regulatory + institutional entry + technological development = great opportunity.
Challenges and Risks of yield-bearing crypto assets
Meaning: Investors don’t know exactly how much risk they’re taking on a yield asset—losses are possible, prices can fall, and platforms can fail. Platform and technical risks: DeFi can involve smart contract bugs, exchanges, or liquidity crunches. Crypto regulations vary across countries—many, including India, are still formulating clear regulations. Risks exist in that regard as well. Yield stability: If yields are high but volatile (with higher risk), investors can suffer significant losses. Yield-bearing crypto assets should not be treated like traditional fixed-income assets; there’s greater principal security, but crypto prices are volatile. Liquidity and market participation: If yield assets have barriers to entry (e.g., high Minimum investment requirements, stringent identification procedures), may reduce participation from both institutional and retail investors. Tokenized real-world assets (RWAs) have often been found to have low liquidity. Investing with these challenges in mind is a safe bet.
India and Global Perspective
Global Competition: Regulatory clarity is rapidly increasing in regions like the US, Europe, and Singapore. For example, the GENIUS Act in the US. If India or other markets do not adopt these regulations quickly, it could attract global investors to these markets—which could impact local cryptos. Investor Literacy: The number of crypto investors in India is growing, but awareness about the structure, risks, and platform trust of yield-bearing assets may be low. Therefore, it is crucial to conduct due diligence before investing.
Tips for Investors – What to Look For?
If you are considering yield-bearing crypto assets, the following tips will be useful: Check the platform’s track record. Ensure the platform has not experienced previous accidents. Be confident. Understand the regulatory landscape – How does the platform operate in that country? Are the rules clear?
Look for the difference between promised yields and actual yields – Promising excessive yields can be a red flag. Look for liquidity – Whether assets can be sold or withdrawn quickly. Understand principal risk – Prices could fall, and the platform could fail.
Diversify – Why hold just one asset or platform? Spread the risk. Look at data and metrics – Look at the asset’s TVL (Total Value Locked), the platform’s security systems, and industry-standard compliance. Look at taxes and local regulations – What will happen in India? What will be the impact on investing abroad? Prepare yourself for changes in regulations. Changing regulations can impact yield models. Take a long-term view – Don’t expect huge returns immediately; this is an evolving field.
The Future – What Could Happen? Is it?
The report suggests that this sector could expand rapidly—if appropriate platforms, regulations, and investor confidence remain in place. Even if the share of yield-bearing crypto assets increased from just 10% to 20%, it would signal a major transformation in the crypto market. For example, yield-bearing stablecoins have already shown promise, rising from US$1.5 billion to US$11 billion.
Additionally, platforms will emerge that develop yield-tokenization, fixed-rate lending, fixed-income DeFi models, and more. This could create a bridge between traditional finance and crypto. As such, this could be the “first mile” for both investors and institutional investors—but it’s important to ensure that steps are taken with due consideration of the risks.
Conclusion: yield-bearing crypto assets
“Yield-bearing crypto assets” are a category that is only expected to grow in price. No, but regular income can also be generated. Until now, the share of assets generating this type of income in crypto has been very low—but with regulatory clarity, it is poised to grow rapidly. This growth could be part of a virtuous cycle between investors, platforms, and rulemakers, but risks exist—regulatory risks, platform risks, technical risks, liquidity risks, etc. Investors in India will need to exercise particular caution—regarding local regulations, taxes, foreign investment risks, etc. Ultimately, if done correctly, this could open a new chapter in crypto investing—one where not just “price appreciation” but also “income” is possible.
About the Author
