Tether and Circle Profit from High Rates, Competition Emerging: Reecer
Stablecoin issuers like Tether and Circle are benefiting from high-interest rates, while holders do not receive these returns. Wormhole's Dan Reecer highlighted this issue at Mercado Bitcoin’s DAC 2025 event.
- Tether reported a $4.9 billion net profit in Q2 2025, raising its valuation to $500 billion.
- Reecer indicated that users might soon demand their share of yields or shift investments.
- Projects like M^0 and Agora aim to distribute yield to end users rather than issuers retaining all profits.
Holding non-yielding stablecoins like USDC results in opportunity costs, as Reecer noted, given that these coins are backed by income-generating U.S. Treasuries.
- Money market funds offer an alternative for exposure to stablecoin yields but remain a small segment, with a $7.3 billion market cap compared to the $290 billion global stablecoin market.
- Circle acquired Hashnote for $1.3 billion, aiming to enable convertibility between cash and yield-bearing collateral.
A Tether spokesperson emphasized USDT's role as a digital dollar, vital in emerging markets against inflation and instability, without being an investment product. Yield-sharing could alter stablecoins' nature and regulatory status.
Fireblocks’ Stephen Richardson mentioned the evolution of stablecoins towards real-world applications like cross-border payments and FX services, highlighting potential improvements in corporate payment systems and remittances through tokenized money.