Non-interest bearing describes an asset or account that does not generate any periodic income or return in the form of interest payments. Funds held in such accounts retain their principal value without accruing additional earnings over time. This characteristic is common for certain types of demand deposits or specific digital assets.
Context
In the digital asset space, many cryptocurrencies are inherently non-interest bearing, serving primarily as mediums of exchange or stores of value. However, the rise of decentralized finance (DeFi) has introduced protocols that allow users to earn yield on their digital assets, effectively transforming some into interest-bearing instruments through lending or staking. The distinction between non-interest bearing and interest-bearing digital assets significantly influences investment strategies and product offerings in the crypto market.
Hong Kong's new Stablecoins Ordinance operationalizes a rigorous licensing framework, mandating full reserve backing and prohibiting interest payments.
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