Stablecoin issuers can earn interest or dividends on the assets held to back tokens in circulation. That reserve income is gross revenue, not automatically profit: partner payments and other costs reduce what the issuer keeps, and holders should not assume the return is passed through to them.
How do stablecoin issuers make money from reserve assets?
- Tokens are issued against reserves. A fiat-backed issuer receives customer funds and holds reserve assets intended to support redemption under the token’s terms. Circle describes USDC and EURC reserves as highly liquid fiat reserves separated from its operating funds; Tether says its issued and circulating tokens are backed by reserves and may be redeemed subject to its terms. Circle’s reserve disclosures and Tether’s transparency information describe their respective arrangements.
- The reserves earn a return. An issuer can receive interest on bank balances or securities, or dividends from a money-market fund. Circle’s SEC filing says it earns “interest and dividends on assets held in reserve accounts, which include cash balances held at banks and the Circle Reserve Fund, as applicable.” Circle’s filing describes this as reserve income.
- Circulation and yield affect gross income. More tokens outstanding generally mean more reserve assets and, all else equal, more income. A change in the portfolio’s return also changes income. Circle says reserve income tends to move with stablecoin circulation when the reserve return rate is held constant.
- Costs and revenue sharing reduce the amount retained. Issuers may pay distributors or other partners, as well as incur transaction and operating costs. Circle reports distribution costs, including arrangements with Coinbase, alongside other costs; its arrangements are specific to its business and should not be assumed to apply to other issuers.
The basic distinction is important: reserve income is not the same as net profit. An issuer’s retained earnings depend on expenses and other business revenues, not only on the return earned by reserve assets.
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What happens to the interest earned on the money backing a stablecoin?
The issuer receives the income unless its terms or arrangements provide otherwise. A person holding a stablecoin should not assume that they receive the interest or dividends earned on the backing assets. The reserve yield supports the issuer’s revenue; it is not inherently a payment to token holders.
What assets can generate reserve income?
Holdings vary by issuer, so one company’s portfolio should not be treated as a universal stablecoin model. Circle’s transparency page describes cash deposits, U.S. Treasury securities and overnight reverse Treasury repurchase agreements. It says Treasury and repo holdings may be held in custodial accounts, separately managed accounts or the Circle Reserve Fund, a money-market fund managed by BlackRock. Circle’s page also describes weekly reserve-holding disclosures and monthly third-party assurance.
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Those details describe Circle’s disclosed approach, not the holdings of every issuer. To understand another stablecoin’s economics, check that issuer’s own current reserve disclosures and the reporting date they cover.
How much does the issuer actually keep?
Public-company filings can show why gross reserve income should not be mistaken for what the issuer retains. For the quarter ended June 30, 2026, Circle reported $324.6 million in distribution costs connected with Coinbase agreements. That is a company- and period-specific cost figure, not a universal stablecoin fee or a measure of Circle’s net profit. Circle’s SEC filing also reports other revenues, including subscription and services, transaction-related revenue, redemption fees, blockchain rewards revenue and platform infrastructure use. These additional lines are specific to Circle’s reported business and should not be assumed to be material or present for every issuer.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to compare issuer disclosures
- Asset mix and liquidity: Look at disclosed cash, short-duration Treasuries, repos, money-market funds and other holdings.
- Yield exposure: Consider both the amount of tokens in circulation and the return on the reserve portfolio; either can affect gross reserve income.
- Distribution economics: Check whether the issuer describes partner payments or revenue-sharing arrangements, and how it reports those costs.
- Other revenue and expenses: Separate reserve income from fees, platform services and other business lines, as well as from operating and transaction costs.
- Disclosure scope and timing: Note the reporting date, frequency, assurance provider and whether a document is a reserve report, an attestation or a financial statement.
These documents do not all establish the same things. Tether says its reserve reports are “not financial statements but selected financial information extracted from accounting records.” Its issuer information describes quarterly reserve reports and says updates are not guaranteed at a particular interval. A reserve report or assurance statement should therefore be read according to its stated scope and date, not treated as a full financial-statement audit unless the document specifically supports that characterization. Tether’s transparency information explains its reporting approach.
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A Treasury Borrowing Advisory Committee presentation from Q2 2025 compares selected issuers’ reserve compositions, but notes that the figures were self-reported and not independently verified by Treasury or the committee. It is a dated snapshot, not a current verified ranking. The committee’s Q2 2025 presentation includes that qualification.
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