Stablecoin Issuers Reap Billions from Reserves While Users Remain Unrewarded

Stablecoin issuers don't just store user deposits; they also invest them in highly liquid assets to earn interest. This allows them to generate billions of dollars annually, even without charging users a large transaction fee.

The process begins when an issuer creates a dollar-backed stablecoin. The business model becomes more complex as the dollar arrives, as issuers use reserves in assets like U.S. Treasury bills, government money-market funds, and bank deposits to earn interest.

For instance, if an issuer had $10 billion of reserves earning 4% annually, the simplified gross income would be $400 million per year. However, stablecoin holders don't receive this yield; instead, it helps issuers cover operational costs like custody, compliance, and employee salaries.

Circle is a notable example, with its USDC reserve income reaching $667.7 million in the second quarter of 2026, accounting for 95.2% of total revenue. This demonstrates how stablecoin reserves can create an important relationship with Federal Reserve policy, as interest rates directly impact reserve income.

Tether and Ripple's RLUSD follow a similar principle but have different reserve structures. Tether reported approximately $184.6 billion of USDT issuance and a $4.11 billion reserve buffer at the end of Q2 2026, while RLUSD reserves can include U.S. Treasury bills with three months or less remaining to maturity.