- Tether and Circle are earning significant profits from yields on U.S. Treasuries backing their stablecoins, while holders do not receive any of the yield.
- Platforms such as M^0 and Agora are developing ways to share yield directly with stablecoin users or applications.
- Tether reported $4.9 billion in net profit for the most recent quarter, pushing its valuation to about $500 billion in a new funding round.
- Regulatory concerns prevent Tether and Circle from directly sharing yield with stablecoin holders, but alternative investment products like tokenized money market funds are emerging.
- A Tether spokesperson said the primary benefit for users, especially in developing countries, is protection against local currency inflation, not yield.
At the Mercado Bitcoin’s DAC 2025 event, Dan Reecer, co-founder of Wormhole, stated that large stablecoin providers like Tether and Circle are collecting all the profits from the interest earned on U.S. Treasuries that back their tokens. He explained that, although holders own these stablecoins, they receive none of the yield from the underlying assets.
Tether recorded $4.9 billion in net profit for the latest quarter, raising its valuation to around $500 billion in a recent funding round. With ongoing high interest rates, Reecer suggested that stablecoin users may soon demand a share of these earnings or consider moving their assets to platforms offering such returns.
New options are developing for those users. Projects like M^0 and Agora are building stablecoin platforms that channel some or all of the yield directly to their users or the applications built on top of them, instead of the issuer keeping all of it.
During the event, Reecer commented, “If I’m holding USDC, I’m losing money, losing money that Circle is making.” He noted that stablecoin holders face an opportunity cost, as their tokens are backed by interest-generating U.S. Treasuries, but do not earn that income themselves. Directly sharing these profits could, however, create regulatory issues, which may be why Tether and Circle do not currently distribute the yield to token holders.
Alternative products like tokenized money market funds give investors a way to access underlying yields. Earlier this year, Circle bought Hashnote for $1.3 billion. Hashnote issues the tokenized money market fund USYC, aiming to allow users to easily move between regular cash and blockchain-based, yield-bearing assets. According to RWA.xyz, these money market funds currently have around $7.3 billion in market cap, far less than the $290 billion global stablecoin market.
A Tether spokesperson said in a statement to CoinDesk, “USDT’s role is clear: it is a digital dollar, not an investment product.” The spokesperson stressed that many people, particularly in emerging markets, use USDT as protection against inflation and currency instability, not as a yield-bearing investment. “Passing along yield would fundamentally change a stablecoin’s nature, risk profile, and regulatory treatment,” the spokesperson added, noting that other projects experimenting with yield-bearing stablecoins face different risks.
Stephen Richardson of Fireblocks added that stablecoins are also finding use in cross-border payments and foreign exchange services, and that tokenized assets are already being used as collateral in trading and other financial transactions.
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