How is a money printing machine with annual revenue of tens of billions of dollars made? Why are stablecoin issuers so profitable?

According to CoinDesk Data, stablecoin issuers have quietly created nearly $10 billion in revenue over the past year. Among them, Tether leads with an astonishing profit of $6.56 billion, followed by Circle with $1.89 billion. This raises curiosity about how these "stable" companies transform the promise of "1 dollar" into money-printing machines, hiding a profound transformation involving trust, interest spreads, and financial innovation. In the crypto world's spectrum, Tether (USDT) and Circle (USDC) undoubtedly represent the most traditional, "classical" stablecoin models. Their core business logic is simple to the point of being boring: users give them 1 dollar, and they provide a token that can freely circulate on-chain, promising users can exchange it back for 1 dollar anytime. This process is essentially an interest-free deposit. Where do profits come from? The answer lies in the massive dollar reserves deposited by users. The beauty of this business is an ancient financial privilege—Seigniorage. In the stablecoin world, issuers "mint" digital dollars at almost zero cost, then invest users' real dollar assets into low-risk assets generating stable returns. These investment earnings, after deducting extremely low operating costs, constitute the issuers' enormous profits. [The translation continues in this manner, maintaining the original structure and meaning while translating the entire text to English.]

At the current stage, the core value that stablecoins provide to users is not returns, but utility. For traders, it is a safe haven to avoid volatility; for DeFi players, it is the base currency for participating in various on-chain activities; for some users in developing countries, it is even an important tool to combat local currency depreciation. These utilities have already surpassed the portion of "sacrificed" interest returns in users' minds. As Li Jin, founder of venture capital firm Variant Fund, pointed out: "Users are willing to pay an 'implicit fee' for the convenience and functionality of stablecoins, which is the interest they give up."

However, this situation is not static. As the market matures and competition intensifies, users' demand for returns is awakening. Some projects have begun exploring the "interest-bearing stablecoin" model of sharing returns with users. For example, USDM issued by Mountain Protocol invests its reserves in US Treasury bonds and plans to return part of the earnings to users as rewards. This model directly challenges the business foundation of Tether and Circle, attempting to distribute the "seigniorage" dividends to ecosystem participants.

It can be foreseen that the future stablecoin market will no longer be just a competition about "stability", but more about a competition of "returns". This may trigger a reshaping of the industry landscape. Will giants like Tether and Circle be forced to start paying interest to users? If they do, how will they address the subsequent regulatory challenges? Because once stablecoins start paying interest, they increasingly resemble securities or money market funds in the eyes of regulators.

The famous investment bank Bernstein boldly predicted in a report that by 2028, the stablecoin market size will grow from the current approximately $160 billion to an astonishing $2.8 trillion. Behind this prediction is the enormous potential of stablecoins as the underlying infrastructure for global payment networks and new financial products.

Conclusion

From the classic interest spread earned by Tether and Circle through the Federal Reserve's "tailwind" to Ethena's aggressive arbitrage in the derivatives market, stablecoin issuers have shown us the amazing wealth-creating capacity in the crypto world through different methods. Their story is not just about billions of dollars in profits, but also a mirror reflecting the collision and game between traditional finance and decentralized innovation. This money-printing machine roars, driven by fuel that is users' rigid demand for "stability", the demographic dividend of high-interest environments, and financial engineers' clever use of rules. In the future, this grand narrative about stability, profits, and innovation has only just begun.