Stablecoin issuers make money much like a money market fund: you give them 1 dollar, they give you 1 USDT. Then they use that dollar to buy interest-bearing assets, and the interest is theirs.
So a stablecoin issuer's revenue structure is essentially "using other people's money to earn interest for themselves." Breaking it down, there are four main sources:
1. Reserve Interest (the biggest income source)
This is the core, most stable revenue stream. Whenever a user deposits $1 to get a stablecoin, the issuer invests that dollar. The investments are mainly short-term U.S. Treasury bills, repurchase agreements, and cash equivalents.
Tether's profit in 2025 exceeded $10 billion. Around 82% of its reserves are in U.S. Treasuries, with about 127.5 tonnes of gold and 96,184 Bitcoin.
Circle's reserve revenue in Q2 2026 was $668 million, up 5% year-over-year, driven by a 25% increase in USDC's average circulating supply. Full fiscal 2025 reserve revenue was $2.637 billion.
This profit model heavily depends on two things: stablecoin circulation and interest rates. Circle's reserve yield dropped from 5.0% in 2024 to 4.1% in 2025, yet revenue still grew because USDC circulation doubled, offsetting the decline.
2. Distribution and Custody Costs (expenses that indirectly affect profit)
To get stablecoins into users' hands, issuers rely on exchanges and wallets for distribution. This is a "cost," but it directly impacts how much profit the issuer gets to keep.
Circle's distribution and transaction costs for fiscal 2025 were $1.662 billion, of which $908 million was paid to Coinbase in 2024—about 54% of that year's total revenue.
Under the agreement, Coinbase receives 100% of the reserve income from USDC held on its platform, plus 50% of reserve income generated elsewhere.
This means: for every dollar Circle earns, roughly $0.54 goes directly to Coinbase. After subtracting distribution costs, the margin (RLDC) stays around 39%, with no significant improvement.
3. Fee Income (minor but growing)
Although Tether and Circle generally don't charge ordinary users for stablecoin transfers, they do have other service fees:
Issuance and redemption fees: In some cases, a 0.1% issuance fee applies, with a minimum amount threshold.
Subscription and service revenue: Circle's other income (including subscriptions and services) in Q2 2026 was $34 million, up 41% year-over-year.
ARC token presale: Circle's ARC token presale raised about $242 million, with an estimated $180 million in revenue to be recognized, pushing full-year other income guidance to $310–330 million.
This segment is still a small share of total income but growing fast. It's an important route for issuers trying to reduce their reliance on interest rates alone.
4. Active Investments and Gains from Volatile Assets
This mainly applies to aggressive issuers like Tether. Beyond Treasuries and cash, Tether holds a large amount of Bitcoin, gold, and equity investments—all volatile assets.
Tether holds roughly 96,184 BTC and about 140 tonnes of gold.
Of its roughly $13 billion net profit in 2024, about 54% came from U.S. Treasury interest, and nearly $5 billion from unrealized gains on Bitcoin and gold.
In a bull market, this structure can amplify profits, but part of the profit is "paper gains"—not as certain as Treasury interest.
How to Verify an Issuer's True Profitability
If you want to assess a stablecoin issuer's real earning power, check two things:
Reserve reports (like Tether's quarterly attestations, Circle's quarterly reports) — see whether reserves are mostly Treasuries or riskier assets.
Distribution cost share — if an issuer gives most of its interest income to distribution partners, its "real retained profit" may look bigger than it actually is.
Next step for readers: Next time a stablecoin issuer announces "annual profits of X billion dollars," first look at its reserve breakdown. If profits include unrealized gains from Bitcoin and gold, the actual cash earnings could be much lower. Separating "interest income" from "investment gains" is a basic skill for judging the true quality of these companies.
