How Do Stablecoin Issuers Make Money? The Economics of USDT and USDC

Stablecoins do not charge holders, do not pay holders, and trade at a flat dollar. So how do stablecoin issuers make money when the product looks like a giveaway?

The answer is simpler and stranger than most business models in finance, and it explains why every major bank and fintech suddenly wants in.

This guide breaks down the core revenue engine, the real numbers behind Tether and Circle.

Stablecoin issuers make money primarily on interest earned from reserves.

When you buy a stablecoin, the issuer holds your dollar, mostly in short-dated US Treasury bills and overnight repo, and keeps the interest those reserves generate. You get a token pegged to $1 with no yield. That retained interest is called the float.

This is not a new trick. Money market funds, banks, and PayPal have earned on customer balances for decades. What changed is the scale and the margin.

A bank competes for deposits with interest, branches, and marketing. An issuer mints a token on demand, pays holders nothing, and collects the yield on the backing. When the Federal Reserve holds rates near 4 to 5 percent, a Treasury bill yields close to that, and the issuer keeps all of it. The result is a deposit-like business with the cost structure of a software company.

Issuer revenue splits into two buckets.

1. Float is the interest on reserves and dwarfs everything else.
2. Flow is usage-based revenue from minting, redemption, and services, a rounding error by comparison today.

Tether is the clearest proof of the model. The company reported roughly $13 billion in net profit for 2024, of which about $7 billion came from Treasuries and repo directly backing USDT, with the rest from gold, Bitcoin, and other holdings.

For full-year 2025, Tether reported more than $10 billion in net profit, with direct US Treasury exposure of $122 billion and over $186 billion in USDT circulating.

Put the headcount next to the profit and the picture sharpens. A few hundred employees produced profit that rivals storied Wall Street firms, with no loan book, no branch network, and no deposit insurance premium. Just a pile of T-bills and a token that costs nothing to issue.

Tether's scale also makes it one of the largest holders of US government debt worldwide, and the float funds its expansion into everything else, including a strategic round it led with IDG Capital into payments infrastructure built on these rails.

Circle, the issuer of USDC, runs the identical reserve-interest model but keeps far less of the take. For full-year 2025, Circle reported total revenue and reserve income of $2.7 billion, up 64%, with reserve interest making up the vast majority. So why does it post thin net income?

The answer is distribution.

Circle's S-1 disclosed that it and Coinbase split residual USDC reserve revenue 50/50, with Coinbase taking 100% of the income on USDC held on its own platform. The payouts are large.

In Q1 2025, Coinbase earned roughly $300 million in distribution from Circle, more than Circle's total net revenue of $230 million that quarter.

Beyond the float, issuers earn from mint and redemption fees, institutional treasury services, and yield on non-Treasury reserves. These lines are small relative to reserve interest, but they matter for diversification as rates fall.

Mint and redeem fees apply to large institutional flows, not retail purchases. For the average user buying $200 of USDC, the cost is effectively zero, which is why adoption spreads. Some issuers also hold a slice of reserves in higher-yielding assets, which adds income and risk in equal measure. Tether ended 2025 holding $17.4 billion in gold and $8.4 billion in Bitcoin.

Still, strip out the float and most issuers would struggle to justify the business today. The fees are the side dish.

Issuer profit rises and falls with interest rates, and this is the single biggest risk to the model. Because revenue is almost entirely T-bill yield, a Federal Reserve cut hits the top line directly.

As CNBC put it, the model is making the product free and keeping all the interest from the Treasuries, so when rates fall it has a giant impact on the bottom line. The "easy money" era of 2023 to 2024, when rates sat above 5 percent, produced the record profits everyone quotes. That tailwind is reversing.

The exposure scales with reserve size. Tether's $122 billion Treasury book means a single quarter-point cut shaves hundreds of millions off annual interest income. Circle is even more exposed relative to its size, since reserve interest is nearly its entire revenue line and half the yield already goes to Coinbase.

Here is the contrarian read most explainers avoid. The stablecoin profit headlines you have seen are a high-rate artifact, not a permanent feature. It is why Tether diversifies into bitcoin and gold, and why Circle pushes into payment-network fees that do not depend on the Fed.

For a business evaluating stablecoins, the implication is direct. Build your case on settlement speed and cost, not borrowed yield. The same dynamic explains why yield-bearing stablecoins and tokenized money market products emerged, passing reserve interest to holders and attacking the exact margin issuers depend on.

The GENIUS Act, the US stablecoin law, hardwires the float model by mandating reserves and banning interest to holders. Issuers must hold 1:1 reserves in cash, short-dated Treasuries, repo, or money market funds, with monthly disclosure. Reserves must be segregated and cannot be rehypothecated.

The decisive clause for economics is the yield ban. Section 4(a)(11) prohibits issuers from paying holders any interest or yield tied to holding the coin. In plain terms, the law guarantees that the float stays with the issuer. Holders get a dollar token and nothing more.

This is regulation that entrenches an incumbent advantage. By forbidding interest to holders, the act blocks the most obvious competitive attack, a coin that simply shares its yield.

A neobank adding dollar accounts, a remittance app cutting settlement from days to minutes, a payroll or EOR platform paying contractors in stablecoins, and a PSP adding stablecoin rails all face the same hurdle. Moving between fiat and stablecoins across borders, compliantly, without becoming a reserve manager or a licensed issuer themselves.

Transak provides the regulated pay-in and payout infrastructure to do exactly that through one API, so you capture the settlement speed and cost advantages of stablecoins while the licensing, compliance, and reserve mechanics stay off your balance sheet.

Talk to our team to map it to your flows.

Tether is the largest stablecoin issuer by circulating supply, with over $186 billion in USDT outstanding at the end of 2025. Circle, which issues USDC, is the second-largest and the most prominent publicly traded issuer following its 2025 IPO. Together they dominate the dollar-pegged stablecoin market.

Yes, stablecoins are extremely profitable for issuers in a high-rate environment. Tether reported roughly $13 billion in profit for 2024 and over $10 billion for 2025, almost entirely from interest on Treasury reserves. Profitability falls when interest rates fall, since reserve yield is the dominant revenue source.

Banks resist stablecoins because they pull deposits out of the banking system. When customers convert dollars into stablecoins, those funds move into the issuer's reserves rather than bank accounts that fund lending. Stablecoins also compete on payment speed and cost without paying interest, which pressures traditional deposit and remittance revenue.

Issuers hold customer dollars as reserves in interest-bearing assets, mainly short-dated US Treasury bills and overnight repo. The issuer keeps that interest, called the float, while holders receive only a token pegged to $1. The GENIUS Act legally bars issuers from passing any of that yield to holders.