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USDT profitability — Tether earnings 2024
During the initial half of 2024, Tether discreetly reported one of the largest profit collections in cryptocurrency history, accumulating an astonishing $5.2 billion over merely two quarters.
This isn’t a misprint: $4.52 billion in Q1, succeeded by another $1.3 billion in Q2.
In opposition to common assumptions, this financial boon didn’t arise from trading charges or generating additional USDt (USDT). It was derived almost entirely from interest earnings on Tether’s reserve holdings — primarily US Treasuries.
By mid-2024, Tether had gathered $97.6 billion in US government securities, quietly establishing itself as one of the globe’s most significant holders of Treasuries, surpassing the reserves of many sovereign states.
This highlights an essential aspect of the stablecoin financial model: Users deposit fiat (like USD), and in exchange, Tether produces USDT while investing those funds into low-risk, yield-producing resources.
Thus, if you’ve ever questioned how stablecoins generate profit, here it is: Fiat-backed stablecoins such as Tether’s USDT function as financial intermediaries. With global interest rates remaining high, that passive income generator is presently more robust than ever.
Did you know? The first stablecoin in existence was BitUSD, launched in July 2014. Developed by blockchain innovators Charles Hoskinson and Dan Larimer on the BitShares platform, BitUSD aimed to maintain its peg by securing BTS tokens within smart contracts as collateral.
How Tether generates revenue
Stablecoin issuers do not advance funds like conventional banks, yet they frequently earn comparable amounts.
As of March 2025, Tether’s complete exposure to US Treasurys — covering direct investments, reverse repos and money market instruments — neared $120 billion. This positions it among the top 20 Treasury holders globally, with exposure exceeding that of numerous governments.
However, Treasurys represent only one aspect of the equation. Tether’s diversified reserve approach encompasses gold, Bitcoin (BTC) and secured loans, providing both yield and a safeguard against volatility. For instance, in Q1 2025, gold holdings helped buffer fluctuations in crypto markets, illustrating how crypto peg mechanisms can depend on a combination of tangible assets, not solely cash.
Additionally, Tether’s continual issuance of collateralized loans (supported by its reserves) introduces another revenue stream. Although less highlighted, these loans have historically generated hundreds of millions annually.
With $5.6 billion in excess reserves as of March 2025, Tether functions more like a prudent asset manager than a tech startup. Its stablecoin income sources vary from interest on Treasurys and precious metals to digital assets and lending, confirming that the USDT profit model is founded on more than just crypto speculation.
Did you know? Tether was established in 2014 in Santa Monica, California by Brock Pierce, Reeve Collins, and Craig Sellars. Initially named “Realcoin” and built on Bitcoin’s Omni Layer, it rebranded to “Tether” on Nov. 20, 2014.
Tether’s concealed revenue mechanisms: Fees, lending, and fintech
Interest gains may fuel Tether’s primary returns, but they aren’t the sole revenue source. Here’s an in-depth examination of how Tether earns beyond mere yield.
1. Transaction and conversion fees
While sending USDT may seem complimentary for the majority of users, Tether capitalizes on the backend, particularly from issuance and redemption fees for institutional partners and exchange collaborations.
In early 2025, Tether was generating over $122 million weekly in fees across networks like Ethereum, Tron, and Solana, as per DefiLlama and CryptoRank. Cumulatively, that exceeds $6.4 billion annually, reinforcing Tether’s status not only as the leading stablecoin by market capitalization but also as one of the most lucrative crypto firms overall.
2. Secured lending
Even after scaling back its lending activities, Tether continues to offer collateralized loans, supported by its reserves. These typically yield more than government securities and provide substantial, low-risk income, making a significant contribution to Tether’s profits, even if precise figures remain under wraps.
3. Fintech integrations and collaborations
Tether also gains from its expanding ecosystem, partnering with wallets, fintech services, and exchanges. These integrations (including collaborations with PayPal and Fiserv) create new revenue avenues through API access, transaction fees, and broader network engagement.
Why Tether earned so much in 2024
Tether’s profits in 2024 skyrocketed due to elevated interest rates, substantial reserve expansion, and the agility to operate more swiftly than conventional financial entities.
1. A favorable interest-rate landscape
Throughout 2024, the US Federal Reserve maintained rates at high levels, directly enhancing yields on US Treasurys, Tether’s primary revenue source. With tens of billions allocated in these government bonds, Tether’s returns surged. This underscores the stablecoin revenue model: hold deposits in yield-generating, fiat-backed assets and capitalize on the interest.
2. Unmatched magnitude
By mid-2024, Tether had gathered $118 billion in total reserves — more than sufficient to support every USDT in circulation. Even minor adjustments in interest rates resulted in hundreds of millions in extra profits. This scale is a significant factor behind Tether’s 2024 earnings exceeding all other stablecoin issuers.
3. Operational agility
In contrast to regulated banks, Tether is not encumbered by capital restrictions or complex compliance demands. Its centralized framework enables rapid movement, reallocating capital to seize yield, optimizing reserve duration, and adjusting to market dynamics without bureaucratic obstacles.
Collectively, these three levers — high yields, immense scale, and swift execution — created an ideal environment for stablecoin profitability in 2024.
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Dangers and critiques of the stablecoin business framework
Although the stablecoin business framework can be remarkably profitable, it is not without contention, and Tether remains at the heart of several discussions.
Persistent regulatory pressure
Tether’s reserve strategies and Anti-Money Laundering (AML) adherence have frequently faced scrutiny from regulators such as the Securities and Exchange Commission and global financial oversight authorities. While Tether now publishes regular attestations and has recruited experienced financial executives, it still has not disclosed a complete, independent audit. This leaves the issue of whether every USDT is genuinely backed open to interpretation.
European delistings
Since early 2025, prominent EU-regulated platforms, including Binance, Kraken, and Coinbase, have either removed USDT from their listings or restricted it to “sell only” status, citing non-compliance with Markets in Crypto-Assets (MiCA), Europe’s recent crypto regulatory framework.
Interest-rate exposure
Tether’s profit mechanism is dependent on interest earnings from Treasurys. However, that very strength is also a risk. If the Fed lowers rates by even 50 basis points, annual revenue could decline by over $600 million, compelling Tether to seek yields elsewhere or accept narrower margins.
Asset concentration exposure
While Treasurys provide consistency, they also pose concentration risk. As Tether pivots further into gold, cryptocurrencies, and secured loans, it becomes vulnerable to market volatility and counterparty risks. This creates a trade-off between stability and yield, which could become more evident as interest rates decrease.
Did you know? Under the EU’s MiCA regulations, “significant” stablecoins like USDT are required to maintain at least 60% of reserves in European banks — a stipulation Tether has declined.
Stablecoin earnings, elucidated: Tether vs. other stablecoin developers
The fundamental model for how stablecoins generate revenue is largely uniform: mint tokens, maintain fiat reserves, and accrue interest. However, Tether’s supremacy alters the equation significantly.
As of June 2025:
This scale alone provides Tether with a substantial advantage in profitability. In 2024, it reported nearly $13 billion in gross earnings. In contrast, Circle — despite its robust compliance and institutional focus — generated only $156 million in net profit.
What accounts for this disparity? Circle shares its interest income with Coinbase, maintains reserves in US banks, and undergoes monthly audits by a Big Four firm (Deloitte and Touche). It’s a transparent, conservative approach that attracts institutional interest but limits earnings.
Paxos adopts a comparable strategy: a smaller footprint, stringent regulation, and capped upside. Meanwhile, Tether retains the majority of its profits, capitalizes on volume, and operates with far fewer restrictions.
This distinction highlights the tension between transparency and profit within the crypto revenue models arena.
As regulations gradually align with Tether, it will ultimately have to decide between maintaining its extraordinarily high profits in an increasingly restricted market or conforming to the stricter regulations that now govern its competitors.
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