How do stablecoins make money? Issuers and holders explained

Stablecoin issuers earn interest on the dollars behind every coin, while holders earn only when they lend, deposit or collect rewards from a distributor.

Stablecoins make money for their issuers by investing the dollars behind each coin in Treasury bills, repo and cash, and keeping the interest. Tether reported about $1.5 billion of net operating profit for the second quarter of 2026, and Circle booked $668 million of reserve income in the same quarter. The coins themselves pay holders nothing, so anyone holding a stablecoin makes money only by putting it to work in a lending market, a vault or a rewards program.

How do stablecoin issuers make money?

When a customer sends $1 million to an issuer, the issuer mints 1 million coins and invests the $1 million. The coins are a liability that pays no interest and the reserves are an asset that does, and the issuer's business is the spread between them.

• Reserve income: interest on Treasury bills, repo and money market funds. For both of the largest issuers this is nearly all revenue.
• Mint and redemption fees: Tether's published fees are 0.1% to issue and the greater of 0.1% or $1,000 to redeem, with a $100,000 minimum and a $150 verification fee.
• Services: Circle's "other revenue", mostly fees from blockchains that pay to integrate USDC plus usage fees such as CCTP fast transfers, was $34 million in Q2 2026.
• Investment gains: Tether also holds gold and bitcoin, so market moves in those assets change its profit.

The reserve-income maths, worked through

A simple estimate multiplies supply by the short-term Treasury rate. The 3-month Treasury bill yielded 4.01% on 22 September 2026 (FRED), and supply figures are from DefiLlama on 23 September 2026.

These are upper bounds before costs. Reserves include some cash earning less than the bill rate, supply moves daily, and issuers pay operating and distribution costs out of the gross. Circle's Q2 reserve income of $668 million annualises to about $2.7 billion, below the simple estimate for USDC.

Rates hit the model directly. Circle's reserve return rate fell 66 basis points year on year, and reserve income still rose 5% only because average USDC in circulation grew 25%. A 1-point cut in rates removes about a quarter of gross income, which an issuer offsets mainly by growing supply.

How does Tether make money?

Tether's Q2 2026 attestation, prepared by BDO, shows about $184.6 billion of USDT issued at 30 June 2026. Net operating profit of about $1.50 billion for the quarter was "led by U.S. Treasury and repo". Total assets were $187.75 billion against $183.64 billion of liabilities, leaving about $4.11 billion of reserves above what's needed to back every token.

Tether's attestation doesn't break out payments to distribution partners. Tether also holds more than 146 tons of gold and some bitcoin, which adds profit in rising markets and losses in falling ones.

How does Circle make money, and how much goes to Coinbase?

Circle's Q2 2026 results show $701 million of total revenue and reserve income, of which $668 million was reserve income. Distribution, transaction and other costs took $412 million, about 59% of revenue, and net income was $48 million.

Much of that $412 million is payments to distribution partners, and Coinbase is the largest. Coinbase reported $292 million of stablecoin revenue for Q2 2026 in its quarterly filing, and its earnings release says it has captured about 50% of all USDC economics over the past year. Average USDC held in Coinbase products reached $20 billion in the quarter.

Why can't holders get the reserve income?

Section 4(a)(11) of the GENIUS Act, signed in July 2025, bars a permitted issuer from paying holders "any form of interest or yield (whether in cash, tokens, or other consideration) solely in connection with the holding, use, or retention" of the coin. That leaves the reserve income with the issuer.

The ban applies to issuers, so distributors that receive a share of reserve income can pass some of it to their own customers as rewards, which is how Coinbase pays 3.75% on USDC to Coinbase One members (rates vary by region). Whether that pass-through should stay allowed is part of the market-structure debate in Congress, covered in our guide to the GENIUS and CLARITY Acts.

How do people make money from stablecoins?

A holder's return comes from someone other than the issuer. Rates on 23 September 2026 from DefiLlama's yield data and the providers' own pages:

• Distributor rewards: Coinbase pays 3.75% on USDC for Coinbase One members, funded by its share of Circle's reserve income.
• Lending markets: Aave v3 on Ethereum paid 3.64% on USDC and 3.68% on USDT, paid by borrowers.
• Protocol savings rates: Sky's sUSDS paid 3.60%, funded by the Sky protocol's revenue.
• Vaults: a curator allocates deposits across lending, liquidity and credit strategies, and the vault's share price rises as those positions earn.

A vault is a pooled version of the lending route. Deposits buy shares, a curator (typically a hedge fund or asset manager) deploys the pool within limits fixed in the vault contract, and returns show up as a rising share price with nothing to claim. Upshift runs more than 50 vaults of this kind across more than 30 chains, many of them in dollar stablecoins. The USDC yield and USDT yield guides compare current rates by venue, and how to earn yield on stablecoins in 2026 covers every route.

Do stablecoins ever lose value?

They can, briefly or for good. USDC fell below $1 in March 2023 after Circle disclosed $3.3 billion of reserves at Silicon Valley Bank, and recovered once US regulators guaranteed the bank's deposits. TerraUSD, which had no cash reserves, collapsed in May 2022 and never recovered.

• Reserve risk: a failed bank, custodian or asset in the reserves can leave coins less than fully backed.
• Redemption access: direct redemption often needs a verified account and a high minimum, so most holders rely on exchange prices during stress.
• Where the coin sits: exchange rewards carry the exchange's risk, and lending markets and vaults add smart contract, oracle and strategy risk.
• Rate risk to yield: every route above earns less when short-term rates fall.

Always make sure to do your own research and be aware of the above and any other risks before depositing.

Frequently asked questions

What is the point of investing in stablecoins?

Stablecoins hold a steady dollar value and move onchain at any hour, which makes them useful for payments, trading and parking cash between trades. A return comes only from lending or depositing them, since the coin pays nothing itself.

How does Tether make money?

By investing USDT reserves, mostly in US Treasuries and repo, and keeping the interest. It reported about $1.5 billion of net operating profit in Q2 2026, and also charges fees on direct issuance and redemption.

How does Circle make money?

From interest on the reserves backing USDC, $668 million in Q2 2026. About 59% of its revenue went out as distribution and transaction costs, mostly to partners such as Coinbase.

Can you make money with stablecoins?

Yes, by lending them, depositing them in a vault or savings protocol, or holding them on a platform that pays rewards. On 23 September 2026 the main Ethereum lending markets paid between about 3.6% and 3.7% on USDC and USDT.

Do stablecoins pay interest?

Issuers don't, and the GENIUS Act bars US permitted issuers from doing so. Rewards and interest come from distributors, borrowers or vault strategies.