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Stablecoin issuers can earn income from the cash and other assets backing their tokens without automatically paying that income to token holders. In Circle’s reported model, interest and dividends on USDC and EURC reserves are the main revenue source; reserve backing and redemption rights do not, on their own, give holders a share of that revenue.
How do stablecoin issuers make money?
A fiat-backed stablecoin issuer typically receives or manages assets associated with tokens in circulation, holds reserve assets under the product’s terms, and earns interest or dividends on those assets. The issuer records that income as revenue, then uses it to cover operating costs and other commercial arrangements. The token’s value proposition may be a dollar-like payment or settlement instrument rather than an investment that pays its holder.
- A customer acquires or redeems a token through an issuer or intermediary, subject to the product’s terms.
- The issuer maintains reserve assets under the product’s reserve and custody arrangements.
- Those assets may earn interest or dividends.
- The issuer recognizes reserve income and pays operating, distribution, and other costs.
- Any income paid to a token holder depends on separate product terms; it does not follow automatically from reserve backing.
Circle Internet Group’s 2025 Form 10-K says it “currently derive[s] a substantial majority” of revenue from reserve income on assets backing USDC and EURC. Its second-quarter 2026 Form 10-Q describes interest and dividends earned on reserve-account assets, including bank cash and the Circle Reserve Fund. These statements describe Circle’s business, not every stablecoin issuer’s revenue mix. Circle’s 2025 Form 10-K Circle’s Q2 2026 Form 10-Q
Why don’t stablecoin holders earn interest?
Because holding a stablecoin and owning a share of its issuer’s revenue are different arrangements. A token can be backed by reserve assets and carry redemption rights under its terms without promising its holder the interest those assets generate. Whether a holder gets yield depends on the product’s legal and commercial structure, not simply on the fact that reserves earn income.
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Circle says USDC and EURC reserves are held separately from its operating funds for holders’ benefit. Its USDC materials describe reserve assets that include short-dated U.S. Treasury securities, overnight Treasury repurchase agreements, and cash. Those descriptions concern backing, custody, and reserve composition; they do not say that each token holder is paid the reserve yield. Circle’s transparency and stability information Circle’s USDC information
This is a Circle-specific illustration, not a universal legal conclusion. Stablecoin terms and holder relationships vary, and yield-bearing products exist; their structures and claims need to be assessed separately.
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Who gets the interest on stablecoin reserves?
In Circle’s disclosed model, Circle recognizes reserve income as company revenue. The company may then allocate some of the economics to commercial partners under its agreements, rather than paying it to token holders as a contractual share of issuer revenue.
Circle’s SEC filings describe arrangements with Coinbase and allocations to approved ecosystem participants. The details are specific to Circle’s agreements, including platform- and ecosystem-related allocations; they should not be treated as a standard arrangement across the stablecoin market. A partner receiving an allocation is not the same thing as every token holder receiving reserve income. Circle’s 2025 Form 10-K Circle’s Q2 2026 Form 10-Q Circle’s partner-allocation disclosure
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What other revenue can an issuer earn?
Reserve income is not the only possible source. Circle’s 2025 filing also describes integration services, blockchain rewards revenue, redemption fees, and fund-management fees. These are examples reported by Circle, not a checklist that applies to every issuer or token. Revenue categories and their importance depend on the company, product, and reporting period. Circle’s 2025 Form 10-K
Why does stablecoin reserve income matter beyond the issuer?
Large reserve portfolios can link stablecoin growth to short-term government debt markets. A 2025 staff paper for the U.S. Treasury Borrowing Advisory Committee estimated that major stablecoin issuers held more than $120 billion in Treasury bills, based on public reserve filings. The paper cautioned that reserve compositions were self-reported and not independently verified by Treasury or the committee; that estimate is not an audited total or a current 2026 figure. U.S. Treasury Borrowing Advisory Committee staff paper
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The broader policy debate includes financial stability, market integrity, and consumer protection. The Bank for International Settlements’ Financial Stability Institute describes the issue as issuers earning income from reserve assets while paying little or no interest to holders. That framing identifies a policy concern; it does not establish that every token has the same terms or that all issuers follow Circle’s model. BIS Financial Stability Institute brief
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to assess a specific stablecoin
To understand who earns reserve income and whether holders receive any yield, check the particular issuer and product rather than assuming all stablecoins work alike. The most useful documents are the product terms, redemption rules, reserve disclosures, and the issuer’s financial filings or equivalent reports.
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- Reserve assets: What assets back the token, and what are their maturity, liquidity, custody, and segregation arrangements?
- Redemption: Who may redeem, under what conditions, and with what fees or practical access restrictions?
- Holder yield: Does the issuer or an intermediary offer yield, and which contractual terms govern it?
- Revenue and costs: What revenue sources and partner allocations does the issuer disclose, using comparable reporting periods?
- Transparency: Is the information from audited financial statements, an attestation, or an issuer-published reserve report, and what exactly does that assurance cover?
- Jurisdiction and product terms: Which rules and terms apply to the relevant region and holder?
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