Stablecoin issuers can earn interest or dividends on the assets held to support tokens in circulation. That reserve income is gross revenue, not automatically profit: distribution payments and other costs reduce what the issuer keeps, and holders should not assume the return is passed on to them.
How do stablecoin issuers make money from reserve assets?
When customers acquire newly issued fiat-backed stablecoins, the issuer receives funds and holds reserve assets intended to support redemption under the token’s terms. Those assets can generate interest—such as on bank balances or securities—or dividends from a money-market fund.
Circle describes the mechanism in its SEC filing: “We earn interest and dividends on assets held in reserve accounts, which include cash balances held at banks and the Circle Reserve Fund, as applicable.” Circle reports reserve income before distribution costs. It says that, holding the reserve return rate constant, reserve income tends to move with the amount of stablecoins in circulation. In practical terms, the amount of reserves and the return earned on them both affect gross income.
What happens to the interest earned on the money backing a stablecoin?
The issuer may retain some reserve income, but the amount left after expenses depends on its business arrangements. Circle reports distribution costs to incentivize distributors, including Coinbase, and describes an allocation mechanism connected to USDC on Coinbase’s platform and broader ecosystem growth. It also reports transaction and other costs. These arrangements are specific to Circle; they should not be assumed to apply to every issuer.
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For the quarter ended June 30, 2026, Circle reported $324.6 million in distribution costs connected with Coinbase agreements. That issuer- and period-specific figure illustrates why gross reserve income is not the same as the issuer’s retained earnings or net profit; it is not a universal fee rate or a measure of net profit. Circle’s SEC filing also describes revenue beyond reserve income, including subscription and services, transaction-related revenue, redemption fees, blockchain rewards revenue, and infrastructure-related revenue.
What assets can make up a stablecoin reserve?
Reserve portfolios differ by issuer. Circle’s transparency disclosures describe cash deposits, U.S. Treasury securities, and overnight reverse Treasury repurchase agreements. 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. This is Circle’s disclosed approach, not a universal reserve recipe. Circle’s transparency page provides information about its reserves.
A U.S. Treasury Borrowing Advisory Committee presentation from Q2 2025 compared selected issuers’ reported reserve compositions, but the committee said the figures were self-reported and not independently verified by Treasury or the committee. Treat that comparison as a dated snapshot, not as a current, verified ranking of issuers. The Q2 2025 presentation states the limitation.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to assess what an issuer earns—and what its disclosures establish
Reserve disclosures can show what assets an issuer reports holding, but they are not necessarily income statements. Tether’s issuer information document says: “Reserves reports are not financial statements but selected financial information extracted from accounting records.” A reserve report or attestation should not be described as a full financial-statement audit unless the particular document supports that characterization.
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Reporting scope and cadence also differ. Circle describes weekly reserve-holding disclosures and monthly third-party assurance. Tether describes quarterly reserve reports, says those reports are selected information rather than financial statements, and notes that updates are not guaranteed at a particular interval. Check the date, scope, and type of document when evaluating what you can verify; a reserve report does not by itself establish the issuer’s net income. Tether’s transparency information and its issuer information documents describe its disclosures and their limits.
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- Asset mix and liquidity: Identify the holdings the issuer discloses, such as cash, short-duration Treasuries, repos, or money-market funds.
- Yield exposure: Consider how the reserve return and the number of tokens in circulation affect gross reserve income.
- Distribution arrangements: Look for disclosed partners and costs; one issuer’s agreements do not describe the whole market.
- Other revenue and expenses: Separate reserve income from fees, platform revenue, and costs where the issuer reports them.
- Disclosure scope and date: Distinguish a reserve report or attestation from financial statements, and note the reporting date and assurance described.
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