- Stablecoins emerged to address limitations in the US banking system, particularly the restricted 9-to-5 banking hours in a 24/7 cryptocurrency market.
- Yield-bearing cryptocurrencies are gaining attention for their ability to generate returns through holding, staking, or lending.
- Know Your Customer (KYC) requirements for stablecoin users vary based on use case, with potential for a trust-based system that allows credential portability across platforms.
Stablecoins gained popularity primarily due to constraints within the traditional US financial system, according to Jerald David, president of Arca Labs. Speaking at the TokenizeThis 2025 event on April 16, David highlighted that limited banking hours and the absence of non-USD trading pairs created the need for alternatives in the cryptocurrency space.
“So we start thinking about the reason why, we start talking about the nine-to-five banking hours,” David explained during a panel focused on yieldcoins – cryptocurrencies that generate returns through holding, staking, or lending activities, similar to stablecoins.
The traditional banking system’s operational limitations directly contributed to stablecoin adoption. David emphasized that conventional banking hours don’t meet the demands of cryptocurrency markets, which operate continuously. “And this industry, as we all know, is a 24-hour industry,” he noted, adding that new payment systems combining yield-bearing instruments with stabletokens are expected to launch soon.
KYC Requirements in the Stablecoin Ecosystem
The panel discussion also addressed Know Your Customer (KYC) procedures for stablecoin users. A representative from Figure Markets suggested that all owners of yield-bearing stablecoins would require KYC verification for tax compliance purposes.
David countered this view, pointing out the variety of stablecoin applications beyond yield generation. “Using this stable token to buy a cup of coffee is not something that really should require AML or KYC for somebody,” he stated, differentiating between investment and payment use cases.
Nick Carmi, head of exchange at Figure Markets, proposed a potential solution through a trust-based KYC system. This approach would allow users to carry their verification credentials across multiple platforms, reducing the friction of completing separate KYC processes for each service.
The Future of Financial Verification
The current KYC landscape requires users to undergo separate identity verification for each financial platform they use. This creates significant barriers, particularly for individuals navigating multiple cryptocurrency ecosystems.
A portable KYC system could address user frustration while maintaining the regulatory protections that verification processes are designed to provide. Such systems aim to prevent fraud and money laundering while improving user experience across the expanding digital asset landscape.
The evolution of stablecoins and their verification requirements highlights the ongoing tension between innovation in the cryptocurrency space and the regulatory frameworks designed for traditional finance.
✅ Follow BITNEWSBOT on Telegram, Facebook, LinkedIn, X.com, and Google News for instant updates.
Previous Articles:
- Miami Firm Battles Stillwater Over Cryptocurrency ATM Ban
- Panama City to Accept Bitcoin, Ethereum for Public Services
- Bitcoin Faces Resistance at $86,000 as Analysts Question Trend Reversal
- Trump’s Insult Triggers $ADAM Crypto Frenzy After “Watermelon Head” Jab
- COVID Stimulus Check Worth $15,000 Today if Invested in Bitcoin
