TLDR
- Tether and Circle are profiting from high interest rates by keeping yields from U.S. Treasuries backing their stablecoins while users get no returns
- Tether reported $4.9 billion in net profit in Q2 2025, with company valuation reaching $500 billion
- New platforms like M^0 and Agora are emerging to route yield directly to applications or end users instead of issuers
- Money market funds are growing as an alternative, allowing investors to gain exposure to yield from stablecoin backing assets
- The stablecoin market is evolving toward real-world use cases like cross-border payments and FX services
Stablecoin giants Tether and Circle are profiting from high interest rates while token holders receive no returns, according to Wormhole co-founder Dan Reecer. Speaking at Mercado Bitcoin’s DAC 2025 event, Reecer said the companies are “printing money” by keeping yields from U.S. Treasuries backing their tokens.
A quick message from the founders of @wormholefdn about the future of @wormhole. pic.twitter.com/8p6Cgrjtkx
— Wormhole (@wormhole) October 1, 2024
Tether reported $4.9 billion in net profit in the second quarter of 2025. The company’s valuation has reached $500 billion in a recent funding round.
Reecer warned that users will eventually expect a share of that yield or move their funds elsewhere. He pointed to the opportunity cost of holding non-yielding tokens backed by income-generating U.S. Treasuries.
New Platforms Challenge Traditional Model
Several platforms are emerging to address this issue. M^0 and Agora allow stablecoin infrastructure to route yield to applications or directly to end users.
These projects represent a shift away from the traditional model where issuers capture all returns. Users holding USDC are “losing money that Circle is making,” Reecer explained.
Tether and Circle likely avoid sharing yield directly with users due to regulatory concerns. Money market funds have emerged as an alternative solution.
These funds allow investors to gain exposure to yields from stablecoin backing assets. Circle acquired Hashnote for $1.3 billion earlier in 2025.
Market Size and Regulatory Response
The acquisition of Hashnote, which issues tokenized money market fund USYC, aims to enable convertibility between cash and yield-bearing collateral. However, money market funds remain a small portion of the overall market.
According to RWA.xyz data, money market funds have a market cap of around $7.3 billion. The global stablecoin market has topped $290 billion.
A Tether spokesperson defended the company’s approach to CoinDesk. “USDT’s role is clear: it is a digital dollar, not an investment product,” they said.
The spokesperson emphasized that hundreds of millions of people rely on USDT in emerging markets. These users face inflation, banking instability, and capital controls.
“While few percentage points might make the difference for rich Americans or Europeans, the real savings for our USDT user base is against dramatic inflation,” the spokesperson explained. Local currency declines can reach 70% year-over-year in developing countries.
Passing along yield would change a stablecoin’s nature, risk profile, and regulatory treatment, according to Tether. Competitors experimenting with yield-bearing stablecoins target different audiences and take on additional risks.
Fireblocks’ Stephen Richardson noted the broader stablecoin market is evolving toward real-world applications. These include cross-border payments and foreign exchange services.
