Stablecoins are becoming increasingly common as a method to exchange value. Maybe you parked some money in USDT between trades. Maybe you sent USDC to a friend overseas. What you might not have stopped to consider is this: how do the companies issuing these tokens make any money when the coins themselves don’t go up in value?
The answer is surprisingly simple. And surprisingly lucrative.
The Basics: Float and Flow
Stablecoin issuers operate on two main revenue engines. The first is called “float,” which refers to interest earned on the reserves backing each token. The second is called “flow,” which covers fees charged when users mint new tokens, redeem them for cash, or access enterprise services.
The float engine works like this. When someone deposits a dollar to receive a stablecoin, the issuer doesn’t just sit on that dollar. Instead, the treasury team invests it in short term, safe assets like U.S. Treasury bills, money market funds, and overnight repos. Those assets pay interest. The issuer keeps all of it.
With the stablecoin market now exceeding $300 billion in capitalization, even modest interest rates translate to massive revenue. In 2024, Tether reportedly generated over $5 billion in interest profits alone. The company posted $13.7 billion in net income that year with roughly 150 employees on staff. That works out to about $93 million in profit per employee. No typo. $93 million per person.
Circle, which issues USDC, follows a similar playbook. The company earned approximately $2.1 billion in 2023, primarily from reserve yield, supplemented by platform fees for enterprise clients using their API and payout services.
Why Stablecoins Matter for Governments
The scale of these operations has turned stablecoin issuers into unexpected players in global finance. Because they park most of their reserves in U.S. Treasuries, these companies have quietly become major buyers of American government debt.
A Morgan Stanley report showed that stablecoin issuers are collectively the 17th largest holder of U.S. debt worldwide. That ranking puts them ahead of countries like Saudi Arabia and South Korea. In 2024, Tether alone was the seventh largest buyer of U.S. Treasuries globally. Meanwhile, traditional powerhouses like China and Japan were net sellers.
Citi projects that by 2030, stablecoin issuers could hold as much as $1.2 trillion in U.S. Treasuries. That would potentially surpass every major foreign sovereign holder today. This gives a handful of private companies extraordinary influence over government borrowing costs and debt markets.
The Fed Controls Issuers Fortune
There’s an irony buried in all this. Stablecoins emerged from the cryptocurrency movement, which prided itself on decentralization and independence from traditional finance. The reality is much different.
Because issuer profits depend almost entirely on Treasury yields, their revenue swings with every Federal Reserve interest rate decision. When rates climb, so do profits. When rates fall, the money dries up. Analysis from Investopedia suggests that a 50 basis point rate cut could reduce industry interest income by $625 million annually.
The “decentralized” dollar turns out to be deeply dependent on the world’s most powerful central bank.
New Stablecoin Rules Change Everything
The U.S. government noticed all this activity. In July 2025, the GENIUS Act became law, creating the first federal regulatory framework for stablecoins. The legislation included a provision that caught many off guard.
Regulated payment stablecoin issuers are now prohibited from paying any form of interest, dividend, or yield to token holders. The logic is straightforward. Regulators want to distinguish stablecoins from investment securities and traditional bank deposits. But the practical effect is significant.
As one legal analysis noted, this rule means issuers cannot share earnings from float with customers. That puts them at a competitive disadvantage compared to banks paying interest on deposits.
The law also requires full 1:1 backing with high quality liquid assets, effectively banning algorithmic stablecoins. It creates a new federal license category under the OCC and applies to any stablecoin sold to U.S. persons, even those issued offshore.
Case Study: How Different Stablecoin Models Work
Not all stablecoins work the same way. USDT and USDC follow the fiat backed model described above, earning primarily from reserve interest with some additional fee income.
USDe from Ethena takes a different approach. It’s a synthetic stablecoin that maintains its peg through delta neutral trading strategies. The issuer holds long positions in crypto while shorting perpetual futures to cancel out price movement. Revenue comes from funding rates on those perpetual positions and staking rewards. When funding rates are positive, the strategy generates income and Ethena takes a cut. When funding goes negative, so does the revenue.
RLUSD, issued by a subsidiary of Ripple, sticks closer to the traditional model. Fully backed by cash and short term Treasuries, the issuer keeps interest earned on reserves. With circulation exceeding $1.3 billion as of late 2025, even moderate Treasury yields generate tens of millions annually. The company charges no direct minting or redemption fees, betting instead on driving volume to its cross border payment tools.
Where Stablecoin Growth Is Actually Happening
Most stablecoins are pegged to the U.S. dollar, so you might assume Americans are the primary users. The data tells a different story.
The strongest adoption is happening in emerging markets. In countries like India, Nigeria, and Indonesia, stablecoins solve real problems. International remittance fees average 6.62% through traditional channels. Cross border payments can take days. Local currencies often depreciate against the dollar, eroding savings.
Stablecoins offer a way around all of this. Faster transfers, lower fees, and access to a stable dollar denominated account without needing a traditional bank. For millions of people in these regions, this isn’t about crypto speculation. It’s about financial survival.
A Conversation That Keeps Coming Up
One of the more memorable discussions at a recent Digital Ascension Group event involved a family office client who had built substantial holdings in digital assets. The question wasn’t about which stablecoin to use or which offered the best yield. It was simpler than that.
“Who actually makes money on these things?”
That single question sparked a two hour conversation about reserve management, Treasury exposure, and how regulatory changes might reshape the industry. It’s the kind of discussion that happens when people move past treating digital assets as speculation and start thinking about them as financial infrastructure.
Digital Ascension Group works with families and individuals who want to understand not just what they own, but how the systems around their holdings actually function. Stablecoins are part of that picture. So are custody arrangements, entity structures, and estate planning considerations that most people never encounter until they need them.
If you’re holding digital assets and want help understanding how the pieces fit together, reach out to Digital Ascension Group at https://www.digitalfamilyoffice.io/contact-us/. No sales pitch. Just a conversation about what you’re trying to accomplish.
What Happens When Money Gets Boring
The stablecoin industry built itself on a simple idea. Make a digital dollar that doesn’t move. The execution of that idea turned out to be one of the most profitable businesses in modern finance.
The companies running these tokens are buying government debt at scale, hiring tiny teams to manage billions, and now operating under new federal rules that reshape how they compete. All while most people barely notice them.
Whether stablecoins end up forcing traditional banks to evolve or simply become a digital wing of the existing system remains an open question. What’s clear is that the “boring” part of crypto is doing some of the most interesting work in finance.
