Stablecoins look simple on the surface: one token, one dollar, instant settlement. The money flow behind them is not simple at all. The real question is who captures the yield generated by the reserves, who earns distribution fees, and who gets nothing despite supplying the liquidity. In the U.S. market, the answer depends on the issuer, the exchange partner, the wallet provider, and sometimes the end user. The economics are visible in public filings, and they tell a much clearer story than the marketing does.
Stablecoins do not pay everyone equally
Most dollar-backed stablecoins are built on the same basic model. A user gives dollars to an issuer or an intermediary. The issuer mints tokens. The reserves backing those tokens are then held in cash, Treasury bills, reverse repos, or money market structures. Those reserves generate income. That income does not automatically flow back to the token holder.
That is the key point. If you hold a plain stablecoin in a self-custody wallet, you usually do not receive the reserve yield. The issuer or its distribution partners do. Public filings make that plain. Circle says reserve income from managing stablecoin-related reserves represented 99.1% of its revenue from continuing operations in 2024, 98.6% in 2023, and 95.3% in 2022. That means the business model is overwhelmingly tied to interest earned on reserves rather than transaction fees or software revenue. Circle also reported reserve income of $733 million in the fourth quarter of 2025, up 69% year over year, and total 2025 revenue and reserve income of $2.747 billion. Those are not side revenues. They are the engine.
Tether follows a similar broad logic, though with a different reserve mix and corporate structure. Public disclosures referenced in U.S. filings describe Tether as publishing quarterly reserve reports that have included Treasury bills, money market funds, reverse repos, bank deposits, secured loans, corporate bonds, precious metals, and other investments. The implication is straightforward: reserve assets produce income, and that income accrues to the issuer unless the issuer separately chooses to share it.
The issuer gets paid first
In the USDC model, Circle is the clearest example because the economics are laid out in SEC filings. Circle states that it retains an “issuer retention” from the payment base, described as ranging from an annualized low-double-digit basis point level to a high tenth of a basis point depending on USDC in circulation on a given day. Circle says that portion is meant to reimburse it for the indirect costs of issuing stablecoins and managing reserves, including accounting, treasury, regulatory, and compliance functions.
That wording matters because it shows the issuer is not just earning a spread by accident. The issuer is contractually first in line for a slice of reserve economics. Then the remaining economics are split further.
Circle’s own sensitivity disclosures show how powerful that position is. Coinbase disclosed that a hypothetical 150 basis point increase or decrease in average interest rates applied to daily USDC reserve balances held by Circle would have changed stablecoin revenue by $540.3 million for 2025 and $293.5 million for 2024. That is a huge swing tied mainly to rates, not token transfer activity. In other words, the issuer’s economics are heavily leveraged to short-term U.S. interest rates.
Distribution partners get paid next
This is the part many retail users miss. Stablecoin economics are often shared with exchanges and ecosystem partners that distribute the token. Coinbase’s filings describe the arrangement in unusually direct terms. From the payment base, Circle retains a portion as issuer. Then Circle and Coinbase each earn an amount based on the share of USDC held on their respective platforms. Other approved participants can also earn amounts based on agreed terms. After that, Coinbase receives 50% of the remaining payment base.
That means custody location matters. The same USDC can be more valuable to one platform than another depending on where balances sit. It is not just about how much USDC exists. It is about where it is parked at the end of the day.
Circle’s filings show the cost of that distribution. For the quarter ended March 31, 2025, Circle said distribution and transaction costs rose by $144.6 million year over year, including a $101.8 million increase in distribution costs paid to Coinbase and a $42.5 million increase tied to other strategic distribution partnerships. That is a concrete map of who gets paid after the issuer: the platforms that bring users and balances.
The user often gets nothing, unless the platform shares yield
Here is the uncomfortable answer to the headline question. In many standard stablecoin arrangements, the end holder does not get paid at all. The reserve yield is captured upstream by the issuer and downstream by distribution partners. The user gets utility: dollar settlement, exchange liquidity, collateral mobility, and blockchain transferability. But utility is not yield.
There are exceptions. Coinbase disclosed that in 2024 it began paying rewards onchain to customers holding USDC balances in Coinbase Wallet. That is important because it shows yield-sharing is a product decision, not an automatic property of stablecoins. If a platform wants to pass through part of the economics, it can. If it does not, the reserve income stays with the issuer and partners.
This is where the stablecoin market is splitting into two categories. One category offers plain payment stablecoins, where holders get stability and transfer utility but no direct reserve return. The other category tries to package some of the underlying yield back to users, often through rewards, tokenized money market structures, or separate yield-bearing wrappers. Circle itself has warned investors that yield-bearing digital assets, including tokenized money market funds, could reduce demand for its stablecoins. That is a direct acknowledgment that users are starting to ask why they should hold a non-yielding token when the reserve assets themselves are earning.
Interest rates decide how much everyone fights over
When short-term U.S. rates are high, the stablecoin pie gets much bigger. When rates fall, the pie shrinks and the fight over distribution becomes more intense. Circle’s first-quarter 2025 outlook said reserve income was expected to rise because average USDC in circulation increased by about 90%, even though average yields were expected to decline by roughly 100 basis points due to U.S. rate actions. That tells you stablecoin economics are a two-variable business: circulation and yield. If one falls, the other has to rise to keep revenue growing.
Coinbase’s annual report says the level of prevailing short-term interest rates affects profitability because the company derives a large portion of revenue from interest on customer funds, stablecoin revenue tied to USDC reserves, and interest on corporate cash. Again, the message is plain. Stablecoins are not just payment rails. They are interest-rate businesses wearing payment-tech branding.
Why this matters for regulation and competition
The payment question is becoming a policy question. If stablecoin issuers earn billions from reserve assets while users receive no direct yield, regulators will keep asking whether the product should be treated mainly as a payment instrument or as a savings-like instrument with different disclosure expectations. Circle has already told investors that the GENIUS Act could change the payment stablecoin ecosystem, even if the exact effects are not yet known.
Competition is also shifting. The old pitch was speed and on-chain dollars. The new pitch is speed plus yield. That is why tokenized Treasury products and reward-bearing wrappers matter so much. They attack the stablecoin model at its most profitable point: reserve income. If users can get near-Treasury exposure onchain, the question “Who gets paid?” stops being academic. It becomes the core product comparison.
Frequently Asked Questions
Who usually earns money from a stablecoin?
Usually the issuer earns first from reserve income, and distribution partners such as exchanges or wallet platforms may earn a share based on contractual arrangements. Circle’s SEC filings say it retains issuer compensation and then shares economics with Coinbase and other approved participants.
Do stablecoin holders receive the interest earned on reserves?
Not by default. In most plain stablecoin models, holders get transaction utility and price stability, not direct reserve yield. Some platforms choose to share rewards, but that is a separate product decision rather than a built-in feature of the token itself.
How important is reserve income to issuers like Circle?
It is central. Circle says reserve income represented 99.1% of revenue from continuing operations in 2024, 98.6% in 2023, and 95.3% in 2022. In the fourth quarter of 2025 alone, Circle reported $733 million in reserve income.
Why do exchanges care so much about stablecoin balances?
Because where the balances sit can determine who gets paid. Coinbase says it and Circle earn amounts based on the share of USDC held on their respective platforms, and Coinbase also receives 50% of the remaining payment base after certain deductions.
What changes when interest rates fall?
The reserve-income pool shrinks. That can pressure issuer margins and make distribution economics more competitive. Coinbase’s sensitivity disclosure and Circle’s guidance both show that changes in short-term rates can move stablecoin-related revenue by hundreds of millions of dollars.
Why is this issue becoming more important now?
Because on-chain investors have more alternatives. Circle has warned that yield-bearing digital assets and tokenized money market funds could reduce demand for traditional stablecoins. As those products grow, users are more likely to compare utility-only stablecoins with yield-sharing alternatives.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice.
