Stablecoin issuers make money almost entirely from interest earned on the reserve assets backing their tokens, not from fees charged to holders. Circle reported reserve income of $733 million in the fourth quarter of 2025 alone, 96% of its total revenue, generated by parking USDC's backing assets in short-dated US Treasury bills and cash. Tether posted more than $10 billion in net profit for full-year 2025 from the same basic mechanism applied to a much larger reserve base. The model is often called the "float": issuers hold dollars (or dollar-equivalent securities) that users deposited in exchange for tokens, invest that float in interest-bearing instruments, and keep the yield while the token itself pays holders nothing.
​

A stablecoin issuer's core business model is collecting deposits in exchange for newly minted tokens, investing those deposits in short-duration, low-risk assets like Treasury bills, and keeping the interest earned. The issuer does not pass that yield to token holders. Revenue scales with the size of the reserve and prevailing interest rates, not with transaction volume or a per-user fee.
​

This is structurally the same model banks use with demand deposits, except stablecoin issuers generally do not lend the float out at a multiple through fractional reserve banking; regulated issuers like Circle hold reserves close to 1:1 in cash and Treasuries. Circle's fourth-quarter 2025 results show reserve income of $733 million against total revenue and reserve income of $770 million for the quarter, meaning reserve income made up roughly 95% of the total, per Circle's Q4 and FY25 earnings release. Circle's 10-K for fiscal 2025 states reserve income was 96.0% of total revenue for the year, up from 99.1% in 2024, per the 10-K filed with the SEC. The remaining sliver comes from subscription, services, and transaction revenue that issuers are trying to grow as a hedge against falling rates.
​

Circle earned $2.7 billion in total revenue and reserve income for full-year 2025, up 64% year over year, while reporting a net loss from continuing operations of $70 million after $424 million in IPO-related stock compensation. Tether reported net profits exceeding $10 billion for 2025 on a reserve base of roughly $193 billion, making it one of the most profitable privately held companies globally by its own disclosure.
​

The two largest issuers differ sharply once profit, not just revenue, is the measure. Circle's FY25 results show Adjusted EBITDA of $582 million, up 104% year over year, but a GAAP net loss driven by one-time stock-based compensation tied to its June 2025 IPO. Tether operates privately and is not required to disclose GAAP financials; its Q4 2025 attestation, prepared by BDO, states total assets exceeding $192.9 billion against liabilities of $186.5 billion at year-end 2025, with USDT circulation surpassing $186 billion. Tether's direct US Treasury holdings exceeded $122 billion by year-end 2025, with total direct and indirect Treasury exposure, including reverse repurchase agreements, surpassing $141 billion, per the same attestation. That places Tether among the largest single holders of US government debt in the world, ahead of many sovereign nations, based on the US Treasury's own foreign holdings data used for comparison in Tether's disclosure. Tether's full-year profit of roughly $10 billion in 2025 came in below the $13 billion the company reported for 2024, a decline Tether attributes partly to falling short-term interest rates compressing the spread it earns on reserves.
​

Reserve interest income comes from the yield on short-duration US Treasury bills, overnight repurchase agreements, and cash deposits that back circulating stablecoin supply. As benchmark rates set by the Federal Reserve rise, the same reserve pool earns more; as rates fall, issuer revenue falls even if the token supply stays flat, which is why 2025 reserve income growth outpaced the reserve return rate.
​

Circle's 10-K explains that reserve assets sit primarily in the Circle Reserve Fund, a government money-market fund, and in cash balances at regulated banks, earning "historically close to the prevailing SOFR" rate, according to the Q3 2025 10-Q filed with the SEC. Circle's own Q4 2025 release attributes the 69% year-over-year jump in reserve income to 100% growth in average USDC in circulation, partially offset by a 68 basis point decline in the reserve return rate as rates eased. For more detail on how reserve composition differs across issuers, see Eco's guide to stablecoin issuer reserves and the side-by-side breakdown in USDC vs USDT reserves, chains, fees.
​

Stablecoin holders generally receive none of the reserve interest because most major issuers structure their tokens as non-yield-bearing by design, and the GENIUS Act, the federal stablecoin law signed in 2025, explicitly prohibits US-regulated payment stablecoin issuers from paying interest or yield to token holders.
​

The GENIUS Act's yield prohibition is one of its most debated provisions. A Congressional Research Service brief on the stablecoin yield debate notes the law restricts issuers from paying interest, yield, or rewards to holders, while banks have pushed to close what they call a "loophole" that lets exchanges pass through yield-like rewards on issuers' behalf, according to a Bank Policy Institute analysis. The practical effect is that the interest income captured on reserves stays with the issuer and its distribution partners rather than flowing to the person holding the token. Investors looking for yield instead turn to a separate category of tokenized products; Eco's guide to how stablecoin yield works covers that distinction, and stablecoin yield vs T-bills compares the returns directly.
​

A large share of Circle's reserve income never reaches Circle's bottom line because it is contractually owed to distribution partners, chiefly Coinbase. Under the companies' Collaboration Agreement, Coinbase receives 100% of the reserve income earned on USDC held on Coinbase's own platform and 50% of the residual reserve income from USDC circulating everywhere else, a split that made Coinbase's take roughly $908 million in 2024, about 54% of Circle's revenue that year.
​

Circle disclosed the mechanics of this arrangement in its IPO prospectus; the S-1/A filed with the SEC lays out the reserve-fund structure and distribution-cost exposure that flows from it. Circle and Coinbase renewed the agreement on its original 2023 terms through 2029, according to reporting on Circle's most recent earnings disclosures, with Coinbase holding roughly 20% to 30% of total USDC circulation on its own platform depending on the period measured. Total distribution, transaction, and other costs for Circle reached $461 million in Q4 2025 alone, up 52% year over year, per the Q4 2025 release. This is the structural reason Circle's revenue has grown faster than its GAAP profit: a large and growing share of every incremental dollar of reserve income is contractually pre-committed to the partners who distribute USDC.
​

Decentralized, crypto-collateralized stablecoins like DAI (now largely migrated to USDS under Sky Protocol) generate protocol revenue from stability fees charged to borrowers who lock up collateral to mint the token, plus yield on real-world assets the protocol holds, rather than from a single corporate issuer's Treasury bill portfolio. Token holders who stake into the protocol's savings product can receive a share of that revenue as yield, unlike holders of USDC or USDT.
​

Sky Protocol's savings rate is funded by protocol revenue from stability fees and real-world-asset holdings, with the rate set by SKY token governance and varying over time, according to Eco's architecture guide to Sky, DAI, and USDS. This is the clearest structural contrast in the stablecoin sector: fiat-backed issuers like Circle and Tether keep the reserve yield and pay holders nothing, while governance-run protocols like Sky route a share of protocol revenue back to token holders who opt into staking, funded by the spread between what borrowers pay in stability fees and what the protocol distributes.
​

The table below compares the three largest stablecoin economic models on reserve composition, 2025 revenue or profit, holder yield, and primary revenue source, each figure sourced to a disclosure fetched for this article.
​

The GENIUS Act's ban on issuer-paid interest is controversial because exchanges and affiliates can still offer stablecoin holders reward programs that function like yield without technically being paid by the issuer, a gap banks call the "rewards loophole" and crypto firms call fair competition against incumbent deposit-taking banks.
​

Section 4 of the GENIUS Act states that "no permitted payment stablecoin issuer... shall pay the holder of any payment stablecoin any form of interest or yield... solely in connection with the holding, use, or retention of such payment stablecoin," according to the Congressional Research Service's summary of the law. The CRS brief notes Congress left "holder" undefined, so it remains unsettled whether the ban reaches an exchange that custodies a stablecoin on a retail customer's behalf and separately pays that customer a reward funded by the issuer's distribution revenue. More than 40 banking associations led by the American Bankers Association sent a joint letter urging Congress to close that gap, warning that unchecked reward programs could pull deposits out of the banking system, according to Grant Thornton's analysis of the GENIUS Act's bank impact. A Senate Banking Committee market-structure draft introduced in January 2026 would have extended the prohibition to exchanges directly, per the same CRS brief, though crypto industry advocates argue the bank position is itself anticompetitive since banks are permitted to pay interest on deposits while a newer entrant is not. GENIUS also permits banks themselves to become payment stablecoin issuers, and several are evaluating tokenized deposits as a competing product, according to a Brookings Institution review of next steps for GENIUS stablecoins.
​

The biggest risk to stablecoin issuer revenue is falling interest rates, since reserve income scales directly with the yield available on short-duration Treasuries and cash, not with transaction volume. A secondary risk is distribution-cost concentration, where a small number of partners like Coinbase capture a majority of gross reserve income, compressing net margins even as gross supply grows.
​

Circle's own Q4 2025 disclosure shows this rate sensitivity directly: reserve income grew 69% year over year even as the reserve return rate declined 68 basis points, because USDC circulation growth outpaced the rate decline, per the Q4 2025 release. If rates fall faster than supply grows in a future cycle, the same mechanism works in reverse. Tether's own comparison of its $10 billion 2025 profit against $13 billion in 2024 profit, attributed in its disclosures partly to compressed reserve spreads, is a live example of that reversal already happening at the largest issuer. Distribution-cost concentration is the other structural risk: Circle's Coinbase-related distribution costs rose to roughly $908 million in 2024 on Coinbase's own disclosed USDC-related revenue, a dependency that persists under the renewed agreement through 2029.
​

Issuers are trying to build non-reserve revenue lines, subscription fees, payments network transaction fees, and new blockchain infrastructure products, because reserve income is entirely exposed to interest-rate cycles outside the issuer's control. Circle's "Other Revenue" line grew from roughly $3 million to $37 million year over year in Q4 2025, covering subscription, services, and transaction revenue, still under 5% of total revenue.
​

Circle's Q4 2025 release points to two specific growth bets: Circle Payments Network (CPN), which had 55 financial institutions enrolled and $5.7 billion in annualized transaction volume based on trailing 30-day activity as of February 20, 2026, and Arc, an enterprise blockchain in public testnet with daily average transaction volumes of 2.3 million over the same trailing window. Neither product depends on the reserve-rate spread the way USDC issuance does; CPN charges network fees for cross-border settlement, and Arc is designed to generate transaction and infrastructure revenue once it reaches mainnet, which Circle says remains on track for later in 2026. Tether has taken a different diversification path, funding a separate Tether Global Investment Fund exceeding $20 billion across AI, energy, and other sectors from profits and excess reserves, explicitly segregated from USDT's backing assets, per its Q4 2025 attestation announcement. Both approaches share the same logic: reserve interest built the balance sheet, and both companies are now redeploying part of that capital into revenue lines that do not disappear if the Federal Reserve cuts rates.
​

Eco operates a stablecoin payments network that routes USDC, USDT, and other dollar tokens across more than 15 supported chains without issuing a stablecoin of its own or capturing reserve interest. Eco Routes lets a payment sent in one stablecoin arrive as a different one on a different chain in a single transaction, a routing layer that sits on top of whichever issuer's reserve economics apply to the token being moved. Because Eco does not custody reserves or mint tokens, its role is distribution and settlement infrastructure rather than participation in the reserve-yield model described above.
​