How Do Stablecoins Make Money? And Why Most Can't Pay You Interest

Dollar stablecoins now hold more than $300 billion, and they pay most of their holders nothing at all. So where does the money go? The short answer is reserve income, and it explains almost everything about this market, from Tether's profits to the new rules in Washington and Brussels.

This guide explains how stablecoins make money, who shares the profit and why the law stops most issuers from paying you interest. It also covers the new Open USD coin, which wants to split the money differently.

How do stablecoins make money?

A stablecoin issuer sells you a digital dollar and promises to buy it back for one real dollar. In return, it holds your dollar in reserve. Most issuers keep those reserves in cash, short-term US Treasury bills and money market funds.

Those assets earn interest. The holder of the coin earns none of it, so the issuer keeps it. That gap is the core of how stablecoins make money.

Here is how a stablecoin makes money, with round numbers:

Now scale that up. According to CoinDesk, Tether's USDT had about $143 billion in circulation and Circle's USDC about $74 billion in September 2026. In other words, the two largest issuers sit on over $200 billion of interest-earning assets.

The four ways stablecoin issuers make money

Reserve income is the main way stablecoin issuers make money, but it is not the only one. Stripe's guide to issuer economics lists several others.

1. Interest on reserves. This is the big one. Issuers earn the yield on Treasury bills, repurchase agreements and bank deposits.
2. Mint and redemption fees. Some issuers charge large institutional clients a small fee to create or redeem coins in bulk.
3. Partnership revenue. Exchanges, wallets and payment networks agree to share revenue in return for distributing the coin.
4. Riskier reserve choices. A few issuers put part of their reserves into assets like gold, corporate debt or Bitcoin to earn more. That raises returns, but it also raises risk.

As a result, an issuer's profit rises and falls with interest rates. When central banks cut rates, reserve income shrinks. When rates rise, it grows.

Who actually keeps the interest?

The money passes through a chain before any of it reaches a user. 24/7 Wall St described it clearly in September 2026:

• The US Federal Reserve sets its policy rate, which had an upper bound of 4.00% on 16 September 2026.
• Short-term Treasury bills then yield roughly 3.87% to 4.08%.
• Circle earns that yield on USDC reserves as reserve income.
• Circle shares part of that income with Coinbase, its main distribution partner.
• Coinbase then passes a portion to users as rewards.

The numbers are large. In the second quarter of 2026, USDC averaged $76.5 billion in circulation and generated $668 million in reserve income, according to the same report. Meanwhile, Coinbase earned $292 million from stablecoins, about a quarter of its revenue.

So the issuer is not the only one who makes money from a stablecoin. Distribution partners often take a big share, because the issuer needs them to put its coin in front of users.

Can stablecoins pay you interest?

In the two biggest Western markets, stablecoins cannot pay you interest directly. Both the US and the EU now ban issuers from paying holders interest.

United States. The GENIUS Act became law on 18 July 2025. Section 4(a)(11) says issuers may not pay holders "any form of interest or yield" for simply holding the coin. Its main rules take effect by 18 January 2027 at the latest.

European Union. MiCA goes further. Articles 40 and 50 ban interest on e-money tokens and asset-referenced tokens. Importantly, the ban also covers crypto service providers and any benefit linked to how long you hold the token. These rules have applied since 30 June 2024.

Why ban it? Regulators want stablecoins to work like digital cash, not like savings accounts. If stablecoins paid competitive interest, money could move out of banks at scale. That would shrink the deposits banks use to make loans, as Mondaq's analysis of both laws explains.

Stablecoin rewards: the gap that survived

There is a catch in the US law. The GENIUS Act bans payments by the issuer only. It says nothing about exchanges or apps that pay rewards from their own share of reserve income.

That gap has driven a fierce fight.

• The OCC proposal. The US Office of the Comptroller of the Currency proposed rules in early 2026 to close the gap. Under its proposal, an issuer would be presumed to break the ban if it arranged for an affiliate or "related third party" to pay yield. Comments closed on 1 May 2026, and the final rule is still pending.
• The CLARITY Act. Congress also tried to settle the question in a wider crypto market bill. The final version would have barred platforms from paying interest on idle stablecoin balances. However, the Senate rejected it 49 to 50 on 15 September 2026, according to The Block.

For now, therefore, US exchanges such as Coinbase can keep offering stablecoin rewards, even though the stablecoins themselves cannot pay interest. Banks will keep lobbying against them, and the OCC's final rule could still change the picture.

Open USD: a new model that shares the money

The newest entrant shows where the business is heading. Open USD (OUSD) went live on 30 September 2026, issued by a company called Open Standard.

Five founding partners back it equally: Coinbase, Mastercard, Shopify, Stripe and Visa. Together they committed more than $1 billion to build its liquidity, according to CoinDesk. It launched on Ethereum, Solana, Base and Tempo, with more than 200 partner companies signed up.

The twist is how it splits the money. Open Standard wants to change who makes money from a stablecoin. Instead of one issuer keeping the reserve income, it plans to share the economics with partners. Each partner's share depends on how much it grows the coin's supply and usage. Chief executive Zach Abrams summed up the pitch: "Every other stablecoin is building a fund. We're building money."

In short, the next phase of competition is about distribution. The coin that pays the networks, apps and merchants best may win, rather than the coin that pays holders.

What this means for you

If you hold stablecoins, a few points matter more than the headlines.

• Your stablecoins make money for someone else. Your balance earns interest, usually for the issuer and its partners.
• Rewards are not guaranteed. They depend on interest rates, the platform's deal with the issuer and future rules. They can fall or stop.
• Reserves matter. A stablecoin is a claim on the issuer, not a bank deposit. Deposit insurance does not cover it, so check what the reserves hold and how often an auditor checks them.
• Location matters. In the EU, MiCA blocks interest and time-based rewards. In the US, rewards from platforms survive for now.

The bottom line

Stablecoins make money the way banks once did on current accounts. They hold your money, earn interest on it and keep most of the return. The difference now is that laws in the US and EU stop issuers from sharing that interest with you directly.

As a result, the real fight is over who sits in the middle. Exchanges want to keep paying rewards. Banks want them banned. Meanwhile, newcomers like Open USD want to share the money with the networks that spread the coin. Watch the final OCC rule and the next attempt at market structure law, because both will decide who gets paid.

FAQs

Sources

1. Open USD takes on Tether and Circle with a different stablecoin model, CoinDesk, 24 September 2026
2. How do stablecoin issuers earn money?, Stripe, updated 7 April 2026
3. What is a stablecoin reward, and why did the CLARITY Act's failure keep it alive?, 24/7 Wall St, 18 September 2026
4. Stablecoin interest, yield and rewards: OCC proposes sweeping regulations under the GENIUS Act, Perkins Coie
5. Why do MiCA and the GENIUS Act ban stablecoin interest?, Mondaq, 30 September 2026
6. Clarity Act's failure gave crypto faster regulatory wins, The Block, 30 September 2026

This article is for education only and is not financial or investment advice. Crypto assets, including stablecoins, carry risk. Figures were checked on 1 October 2026 and may change.