This spread is not captured by a single entity; it is split among various players in the stablecoin industry chain. Currently, most of the spread remains at the issuance layer, held by issuers like Tether and Circle, while an increasing share is flowing to distribution and application layers.
How Big Is the Gap Between Treasury Yields and User Rewards?
Based on 2026 data:
The Federal Reserve benchmark rate stays above 4%, and stablecoin issuers' reserve assets (primarily short-term U.S. Treasury securities) yield between 3.5% and 4.5%.
Coinbase offers around 3.35%–3.5% APY to USDC holders, while Kraken provides up to 4.25% on USDG, and about 1.75% on USDC.
The most obvious gap: there's roughly a 0.5–1 percentage point difference between user reward rates and issuers' reserve yields. More importantly, the vast majority of stablecoin holders receive no interest at all — most users of USDC and USDT get no native yield.
A common misconception: many people see Coinbase offering 3.5% on USDC and assume it's a "universal stablecoin rate." In reality, this is just Coinbase's platform-specific operation. USDC held in your own wallet earns nothing, and the interest earned by issuers is not shared with regular token holders.
Layer 1: Issuers Take the Lion's Share
Tether and Circle are the biggest beneficiaries in this chain.
According to Tether's 2025 disclosures, it directly holds over $157 billion in U.S. government bonds. Even at a 4% yield, that's roughly $6 billion in annual interest income. Circle operates on a smaller scale but uses the exact same model: users deposit dollars for USDC, the issuer buys Treasury bonds with the money, and keeps the interest.
Issuers earn "seigniorage" — they obtain dollars from users at zero cost, then pocket all the interest from Treasuries. The stablecoin tokens you hold are merely a "claim check"; the yield generated by the underlying assets has nothing to do with you.
Layer 2: Distribution Platforms Grab a Cut
Distribution platforms are bargaining to carve out a piece of the issuers' spread.
The revenue-sharing arrangement between Coinbase and Circle is a classic example: for USDC held outside both companies' platforms, after deducting mutually approved third-party ecosystem incentives, the remaining interest income is split 50/50 between Circle and Coinbase. In earlier agreements, Coinbase even captured 100% of the interest generated by USDC on its platform.
Circle has already signed USDC distribution partnerships with over 150 companies, driving USDC growth and distribution through economic incentives. Large channels like Hyperliquid have negotiated the right to a share of USDC yield, then pass a portion of it back to users as rewards.
What distribution platforms take is essentially a "commission" for directing users to issuers.
Layer 3: Users' Rewards Are Only the Leftovers
The 3.5% USDC reward you receive is just a fraction of the share Coinbase gets from Circle.
But there's a mismatch: Coinbase receives "a portion of all USDC reserve yield" and only gives a small cut to users as rewards, keeping the rest as profit. That's why the reward rate you see is always lower than Treasury yields — the distribution platform takes a slice in between.
Risk reminder: stablecoin user rewards depend on commercial agreements between issuers and distribution platforms, not on the stablecoin's design. If the Fed cuts rates, issuer reserve yields decline, the share distribution platforms receive shrinks, and user rewards will also shrink. Circle's Q2 2026 reserve yield already fell 66 basis points year-over-year to 3.5%. If it continues to fall, the pool available for platform rewards will get smaller.
How to Verify This Framework
How much do issuers earn? Check the current Fed benchmark rate or the 3-month Treasury yield.
How much do distribution platforms take? See if the platform has a revenue-sharing deal with the issuer — Coinbase is a publicly known example.
How much do users get? Subtract the Treasury yield from the percentage advertised by the platform. The difference is the total profit taken by issuers and distribution platforms.
Next step: If you care about the sustainability of stablecoin rewards, don't just look at the numbers platforms advertise. Check the "reserve yield" changes disclosed in Circle's latest financial reports. If that figure keeps falling, user rewards will likely follow. After each quarterly report, use that data to reevaluate whether the reward on your stablecoin platform can be maintained.
