Stubcoin giants like Tether and Circle are profiting from the current high profit environment, but stubcoin owners don’t see returns, Wormhole co-founder Dan Reeser said at Mercado Bitcoin’s DAC 2025 event.
Speaking as a panelist, he said the companies are effectively “printing money” by maintaining yields from the US Treasury department, which supports the tokens. For example, Tether reported a net profit of $4.9 billion in the second quarter of the year. This has skyrocketed the company’s valuation to the $500 billion reported in the new funding round.
As interest rates remained rising, Reecer suggested it would be only a matter of time before users would expect a share of their yield or move their funds elsewhere.
Platforms like M^0 and Agora are already meeting the demand, he suggested. These projects allow publishers to build their Stablecoin infrastructure in a way that directly succumbs to the application or end user rather than capture everything.
“If I have USDC, I’m losing money, I’m losing money that the circle is making,” Reecer said in the session, referring to the opportunity cost of holding two non-double tokens supported by the US Treasury Department that generates income.
Tether and Circle may not share the yield generated from Stablecoins directly with users, as they could elicit regulatory outrage. A steadily growing option is money market funds, allowing investors to be exposed to these silly, ridiculous yields.
Circle acquired Hashhnote earlier this year for $1.3 billion. This is the issuer of USYC, a tokenized money market fund. With this acquisition, Circle aims to enable the conversion between cash and harvest collateral on the blockchain.
However, these money market funds are still part of the Stablecoin market. According to data from RWA.xyz, their market capitalization is currently around $7.3 billion, with the global Stablecoin market exceeding $290 billion.
A spokesman for Tether told Coindesk, “The role of USDT is clear: it’s not an investment product, it’s a digital dollar.” He added that “hundreds of millions of people” rely on USDT, which “serves as a lifeline for inflation, bank instability and capital management,” especially in emerging markets.
“While there may be little difference between wealthy Americans and Europeans, the real savings in the USDT user base are against the dramatic inflation that is common in developing countries. In many cases, there is a decline in local currency value against the US dollar year-on-year,” he said.
“Paying yields will fundamentally change the nature of Stablecoin, risk profile and regulatory treatment,” the spokesman added. “Competitors experimenting with yield-holding stubcoins are targeting completely different audiences and taking on additional risks.”
Stephen Richardson of Fireblocks said during the panel that the broader Stablecoin market is evolving towards real use cases involving cross-border payments and Forex services.
He noted that instantly moves money and helps to solve problems that exist today, such as slow corporate payment railroads and expensive remittances. Richardson said that financial innovation is already seen in this sector, with examples being tokenized money market funds being used as collateral for exchanges.