MarketsStablecoinOpinion
|6 min ReadInside the Trillion-Dollar Stablecoin Feast: Who’s Really Making Money
Tariq Al-Saidi
Senior Analyst
Published
Jan 16, 2026
In crypto, Bitcoin and Ethereum get the headlines. But stablecoins — USDT, USDC, and their peers — are the lifeblood that makes the whole system move. They’re the fuel, the chips, and the settlement rails of DeFi. Traders use them to park funds when markets swing. Protocols use them as the base currency for everything.
You hand over one U.S. dollar to Circle and receive one USDC. No interest, no yield. When you redeem it, you get back the same dollar you put in. Yet Circle made 13 billion in profit.
Where did all that money come from? The answer reveals how modern “digital banks” print money without ever calling it that.
The core machine: the float
The business model is simple — boring even — but massive in scale. Stablecoin issuers live off what bankers call “the float.”
When you deposit $1 to mint a stablecoin, they hold that dollar as reserve and invest it. You earn nothing. They earn Treasury yields.
In the zero-rate era, it was barely worth mentioning. But when the Fed hiked rates, that float turned into a money printer. Each rate increase directly boosted their profits. Stablecoin firms became high-beta bets on Jerome Powell’s “higher for longer.” If rates ever go back to zero, their core revenue vanishes overnight.
They also earn fees, especially from big clients. Circle mints USDC for free to grow reserves, charging only modest redemption fees beyond 100,000 minimum. One optimizes for scale. The other for margin.
Circle vs. Tether: Two models, one empire
Both run the same core play, but their risk profiles couldn’t be more different.
Circle is the regulator’s favorite student. Its reserves are managed by BlackRock through the Circle Reserve Fund (USDXX), a U.S. SEC-registered government money market fund. As of late 2025, it held 55.8% in Treasury repos and 44.2% in U.S. Treasuries.
Circle’s message is clear: “Don’t trust me, trust BlackRock.” It gives up some yield to buy credibility, paying management fees to ensure safety and transparency.
Tether plays a different game — part shadow bank, part hedge fund.
Its latest reserve report shows:
U.S. Treasuries: $112.4 billion
Reverse repos: $18 billion
Money market funds: $6.4 billion
Plus the “spice”: 9.8 billion in Bitcoin, 3.8 billion in other investments.
Tether isn’t just clipping Treasury coupons. It’s betting on gold, Bitcoin, and private loans. That’s how it pulled off $13 billion in 2024 profit.
The catch? Those profits come with risk. The $11.9 billion in “excess reserves” Tether flaunts aren’t spare cash — they’re a buffer against the very bets it makes. Tether must stay highly profitable just to stay safe.
The profit split: Open books vs. black box
Circle’s revenue looks big, but its profit is capped by an expensive deal with Coinbase. Since 2018, Coinbase has taken roughly half of USDC’s reserve income. Even though only 20% of USDC circulates on Coinbase, the old contract still gives it 50% to 55% of total interest.
In Q2 2025, Circle made 407 million in “distribution and transaction costs,” most of it to Coinbase. That makes Coinbase not just a partner but a synthetic equity holder in Circle’s income stream.
Tether, meanwhile, operates as a private black box. It’s owned by iFinex, the same group behind Bitfinex, registered in the British Virgin Islands. Its $13 billion profit flows straight to iFinex.
No SEC filings, no shareholder calls. Just three likely outcomes:
Dividends to insiders like CFO Giancarlo Devasini.
Retained capital buffers against market risk.
New bets — from AI startups to Bitcoin mining and renewable energy.
Circle’s profits are public and constrained. Tether’s are private and discretionary. One trades transparency for trust. The other trades opacity for freedom — and far higher returns.
How regular users earn in the stablecoin economy
If the issuers capture all the interest, how do ordinary users make money with stablecoins? By serving others who need them more — and taking on-chain risk in return.
1. Lending. Deposit USDC or USDT into lending protocols like Aave or Compound. Borrowers — traders and leveraged holders — pay interest. You earn most of it; the protocol takes a small cut.
2. Providing liquidity. Add stablecoin pairs (USDC/USDT, USDC/DAI) to pools like Curve. Traders pay fees on each swap — around 0.04%. You get your share. Since prices stay near $1, there’s minimal impermanent loss.
3. Yield farming. Stack strategies to boost yield — collateralize, borrow, redeploy. Higher returns, higher risks: smart-contract hacks, liquidations, and reward dilution.
The grand irony
The stablecoin system runs on two economies.
The first is off-chain and private. Issuers like Tether and Circle park hundreds of billions in U.S. debt, pocketing all the yield while users earn zero.
The second is on-chain and open. DeFi users lend, farm, and provide liquidity, earning from each other instead.
It’s the ultimate irony: a decentralized ecosystem whose lifeblood is controlled by centralized, profit-maximizing “crypto banks.” Their fortunes depend on two pillars — the Fed’s high-rate regime and DeFi’s endless appetite for leverage.
If either pillar cracks, the trillion-dollar stablecoin empire could face its first real stress test.
Disclaimer: This document is intended for informational and entertainment purposes only. The views expressed in this document are not, and should not be taken as, investment advice or recommendations. Recipients should do their own due diligence, taking into account their specific financial circumstances, investment objectives and risk tolerance, which are not considered here, before investing. This document is not an offer, or the solicitation of an offer, to buy or sell any of the assets mentioned.