Ondo Invests $25M in YLDS to Fuel Institutional Adoption of Regulated Stablecoins

Ondo Finance has committed $25 million to Figure's YLDS stablecoin, a move designed to enhance the yield generation and diversification of its flagship tokenized fund, OUSG. The investment underscores Ondo's strategy to integrate blockchain-based assets into its portfolio, aligning with institutional demand for liquid, high-grade digital-asset yields. YLDS, a yield-bearing stablecoin issued by Figure Technology Solutions, is structured as a registered security backed by short-term U.S. Treasuries and repo agreements, offering interest to holders while complying with regulatory frameworks.

The OUSG fund, which tokenizes short-term U.S. Treasuries, currently holds over $780 million in total value locked (TVL), with allocations to institutional products from BlackRock, Fidelity, and other major asset managers. By adding YLDS to its reserves, Ondo aims to diversify its yield sources and strengthen its position as the leading on-chain vehicle for institutional clients. The fund already provides an estimated annual return of 3.68% and offers 24/7 redemptions, appealing to investors seeking transparency and efficiency.

Figure's YLDS stablecoin has gained traction as a regulated alternative to traditional stablecoins, with a market capitalization of approximately $100 million. The investment from Ondo, a U.S.-based RWA tokenization platform, marks a strategic expansion for Figure's blockchain lending infrastructure. Figure, which recently completed its Nasdaq IPO, has facilitated $19 billion in blockchain-based lending across real-world assets (RWAs) and operates platforms like Democratized Prime, where YLDS serves as collateral.

Executives from both companies emphasized the significance of the partnership. Ian De Bode, President of Ondo Finance, stated that the investment "further diversifies and institutionalizes the ecosystem supporting our products," while Figure CEO Michael Tannenbaum highlighted the collaboration as a step toward modernizing capital markets through blockchain technology. The move also aligns with broader industry trends, as crypto-backed lending and tokenized assets gain institutional adoption.

Regulatory scrutiny remains a key challenge for stablecoins, with the European Central Bank warning of systemic risks posed by rapid growth in the sector. However, YLDS's compliance with SEC registration and its focus on U.S. Treasuries position it as a lower-risk option for institutional investors. OUSG's TVL has grown steadily, reflecting confidence in tokenized finance as a viable alternative to traditional markets.

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