On this page
Key Takeaways
- In 2024, stablecoin issuer Tether reportedly generated over $5 billion in interest profits and posted $13.7 billion in net income with roughly 150 employees, working out to about $93 million in profit per employee.
- Under the July 2025 GENIUS Act, regulated payment stablecoin issuers are prohibited from paying interest, dividends or yield to token holders and must maintain full 1 backing with high quality liquid assets.
- A Morgan Stanley report ranked stablecoin issuers collectively as the 17th largest holder of U.S. debt globally, and Citi projects that stablecoin issuers could hold up to $1.2 trillion in U.S. Treasuries by 2030.
- Because stablecoin issuer profits depend heavily on Treasury yields, an Investopedia analysis suggests a 50 basis point Federal Reserve interest rate cut could reduce industry interest income by $625 million annually.
Comparison of Stablecoin Backing Mechanisms and Revenue Models
| Stablecoin | Peg and Backing Mechanism | Revenue Engine |
|---|---|---|
| USDT and USDC | Fiat-backed with U.S. Treasury bills, money market funds and overnight repos | Reserve interest yield (float) and minting, redemption or enterprise platform fees (flow) |
| USDe (Ethena) | Synthetic delta-neutral strategy pairing long crypto positions with short perpetual futures | Perpetual contract funding rates and staking rewards |
| RLUSD (Ripple) | Fiat-backed with cash and short-term U.S. Treasuries | Reserve interest yield with no direct minting or redemption fees |
Stablecoins are becoming a common way to move value. Maybe you parked some money in USDT between trades, or sent USDC to a friend overseas. Either way, the same question applies: how do the companies issuing these tokens make any money when the tokens themselves don’t go up in value?
The answer comes down to two revenue streams, and both of them are large.
The Basics: Float and Flow
Stablecoin issuers operate on two main revenue engines. The first is called “float,” which refers to interest earned on the reserves backing each token. The second is called “flow,” which covers fees charged when users mint new tokens, redeem them for cash or access enterprise services.
Float works like this. When someone deposits a dollar to receive a stablecoin, the treasury team puts that dollar into short term, safe assets like U.S. Treasury bills, money market funds and overnight repos. Those assets pay interest, and the issuer keeps it.
With the stablecoin market now around $300 billion in capitalization, even modest interest rates add up to serious revenue. In 2024, Tether reportedly generated over $5 billion in interest profits alone. The company posted $13.7 billion in net income that year with roughly 150 employees on staff, which works out to about $93 million in profit per employee.
Circle, which issues USDC, works the same way. The company earned approximately $2.1 billion in 2023, mostly from reserve yield, plus platform fees from enterprise clients using its API and payout services.
Why Stablecoins Matter for Governments
The scale of these operations has turned stablecoin issuers into significant players in global finance. Because they park most of their reserves in U.S. Treasuries, these companies now rank among the larger buyers of American government debt.
A Morgan Stanley report showed that stablecoin issuers are collectively the 17th largest holder of U.S. debt worldwide. That ranking puts them ahead of countries like Saudi Arabia and South Korea. In 2024, Tether alone was the seventh largest buyer of U.S. Treasuries globally, while long-standing holders like China and Japan were net sellers.
Citi projects that by 2030, stablecoin issuers could hold as much as $1.2 trillion in U.S. Treasuries. That would put them above every major foreign sovereign holder at today’s levels, and it would give a handful of private companies real influence over government borrowing costs and debt markets.
How Fed Rates Drive Issuer Profits
Stablecoins came out of a cryptocurrency movement built around decentralization and independence from traditional finance. The revenue model behind them depends directly on traditional finance.
Because issuer profits depend heavily on Treasury yields, revenue swings with every Federal Reserve interest rate decision. When rates climb, profits climb with them, and when rates fall, revenue falls too. Analysis from Investopedia suggests that a 50 basis point rate cut could reduce industry interest income by $625 million annually.
So the “decentralized” dollar leans heavily on decisions made at the Federal Reserve.
What the GENIUS Act Changed
The U.S. government noticed all this activity. In July 2025, the GENIUS Act became law, creating the first federal regulatory framework for stablecoins. One provision in it changed the economics of the business.
Regulated payment stablecoin issuers are now prohibited from paying any form of interest, dividend or yield to token holders. Regulators wanted a clear line between stablecoins and both investment securities and traditional bank deposits, and the practical effect on issuers is significant.
As one legal analysis noted, this rule means issuers cannot share earnings from float with customers. That puts them at a competitive disadvantage compared to banks paying interest on deposits.
The law also requires full 1
backing with high quality liquid assets, effectively banning algorithmic stablecoins. It creates a new federal license category under the OCC and applies to any stablecoin sold to U.S. persons, even those issued offshore.Case Study: How Different Stablecoin Models Work
Not all stablecoins work the same way. USDT and USDC follow the fiat backed model described above, earning primarily from reserve interest with some additional fee income.
USDe from Ethena takes a different approach. It’s a synthetic stablecoin that maintains its peg through delta neutral trading strategies. The issuer holds long positions in crypto while shorting perpetual futures to cancel out price movement. Revenue comes from funding rates on those perpetual positions and staking rewards. When funding rates are positive, the strategy generates income and Ethena takes a cut. When funding goes negative, so does the revenue.
RLUSD, issued by a subsidiary of Ripple, sticks closer to the traditional model. Backed by cash and short term Treasuries, the issuer keeps interest earned on reserves. With circulation above $1.3 billion as of late 2025, even moderate Treasury yields can generate tens of millions annually. The company charges no direct minting or redemption fees and is working instead to drive volume to its cross border payment tools.
Where Stablecoin Growth Is Actually Happening
Most stablecoins are pegged to the U.S. dollar, so it would be reasonable to assume Americans are the main users. The adoption numbers point elsewhere.
The strongest adoption is in emerging markets. In countries like India, Nigeria and Indonesia, stablecoins solve real problems. International remittance fees average 6.62% through traditional channels, cross border payments can take days, and local currencies often lose value against the dollar.
Stablecoins offer a way around a lot of that: faster transfers, lower fees and access to a dollar denominated balance without a traditional bank account. For a lot of people in these regions, that’s a practical everyday tool.
A Conversation That Keeps Coming Up
A discussion at a recent DAG event involved a family office client who had built substantial holdings in digital assets. The question they came with was more basic than which stablecoin to use or which one paid the best yield.
“Who actually makes money on these things?”
That question turned into a two hour conversation about reserve management, Treasury exposure and how regulatory changes might reshape the industry. It’s the kind of discussion that comes up once people start thinking about digital assets as financial infrastructure.
Our team works with families and individuals who want to understand how the systems around their holdings actually function. Stablecoins are part of that picture, and so are custody arrangements, entity structures and estate planning considerations that a lot of people don’t run into until they need them.
If you’re holding digital assets and want help understanding how the pieces fit together, you can reach out to DAG and talk through what you’re trying to accomplish.
Where This Leaves the Industry
The stablecoin industry was built on a simple idea: make a digital dollar that holds its price. Carrying that idea out turned into one of the more profitable businesses in modern finance.
The companies running these tokens are buying government debt at scale, running small teams against very large balance sheets and now working under federal rules that change how they compete.
Whether stablecoins push traditional banks to change or end up as a digital wing of the existing system is still an open question. Either way, the part of crypto designed to hold a fixed price is where a lot of the money is being made.
Frequently Asked Questions
How do stablecoin issuers make money?
Stablecoin issuers make money through two main engines called float and flow. Float is interest earned on the reserves backing each token, which issuers invest in short term assets like U.S. Treasury bills, money market funds and overnight repos. Flow covers fees charged when users mint new tokens, redeem them for cash or access enterprise services.
How do Federal Reserve interest rate changes affect stablecoin profits?
Because stablecoin issuer profits depend heavily on Treasury yields, revenue fluctuates with Federal Reserve interest rate decisions. When interest rates climb, issuer profits increase, and when interest rates fall, revenue drops. For example, analysis from Investopedia suggests that a 50 basis point rate cut by the Federal Reserve could reduce stablecoin industry interest income by $625 million annually.
Can stablecoin issuers pay interest to token holders under U.S. law?
No. Under the GENIUS Act passed in July 2025, regulated payment stablecoin issuers in the United States are prohibited from paying interest, dividends or yield to token holders. Regulators created this restriction to distinguish stablecoins from traditional bank deposits and investment securities, preventing issuers from sharing float earnings directly with their customers.
Why are stablecoins popular in emerging markets?
In emerging markets like India, Nigeria and Indonesia, stablecoins address real financial hurdles. Traditional international remittances cost about 6.5% of a $200 transfer on the World Bank global average and can take days to settle, while local currencies frequently lose value against the dollar. Stablecoins provide faster transfers, lower fees and access to dollar denominated accounts without requiring a traditional bank account.