Stablecoin projects continue to dominate the crypto economy, capturing approximately 60% to 75% of total daily protocol revenues across major categories. Tether’s CEO, Paolo Ardoino, has even stated that the firm is on track to achieve $15 billion in profit this year, boasting an extraordinary 99% profit margin. This remarkable performance makes Tether one of the most profitable businesses globally on a per-employee basis.
### How Tether and Circle Generate Revenue
Tether and Circle invest user deposits in safe, yield-bearing assets, primarily U.S. Treasuries and cash, and retain the returns rather than sharing them with users. Stablecoins have become a vital source of cryptocurrency liquidity, widely used across exchanges, decentralized finance (DeFi) systems, and cross-border payment platforms. They offer greater stability compared to more volatile tokens like Bitcoin and Ethereum, making them essential tools for businesses and institutional investors for value transfer.
Stablecoin issuers earn revenue by generating interest on the assets backing their tokens. These safe investments provide a steady return while maintaining the stability that users expect.
### Regulatory Environment and the GENIUS Act
In July, the GENIUS Act was enacted to codify this principle, explicitly preventing authorized stablecoin issuers from distributing any form of yield to holders. Lawmakers designed this regulation to position payment stablecoins as cash-like instruments rather than investment vehicles.
Despite this, growing competition in the stablecoin market has pushed some projects to explore new methods of distributing value. For example, USDe has introduced a synthetic dollar model that provides immediate returns to holders. Additionally, users holding USDC on Coinbase can earn a 3.85% Annual Percentage Yield (APY). This innovative approach represents a creative challenge to the GENIUS Act’s prohibition on issuer-provided yields, signaling a shift in how return on investment (ROI) is generated and shared within the crypto community.
### BlackRock’s Growing Role in the Stablecoin Market
In a report released in late September, Citi analysts projected that stablecoin issuance could surge to $4 trillion by the end of the decade, up from approximately $280 billion today. Reflecting this growth, financial giant BlackRock has been increasing its involvement in the stablecoin space.
BlackRock has maintained a long-standing relationship with Circle, the second-largest stablecoin issuer, overseeing much of its reserve fund. Following Circle’s highly anticipated stock market debut in June, the company is exploring opportunities to offer reserve management services to other stablecoin issuers as well.
The firm’s BSTBL fund plays a critical role in BlackRock’s broader strategy to expand within digital finance. Jon Steel, global head of product and platform for BlackRock’s cash management business, told CNBC, “It represents an opportunity not just to help our clients if they’re looking to issue a stablecoin and how we can help them in doing that, but clearly this is going to create the potential for new distribution opportunities.”
The BSTBL fund is accessible to institutional investors, including pension funds and university endowments. Moreover, longer trading hours could benefit BlackRock’s clients, especially in the Western United States, by allowing them to manage daily cash flow and profit and loss (P&L) operations for a more extended portion of the business day.
BlackRock’s digital asset lineup already includes products based on Bitcoin and Ethereum, marking a significant step forward in their digital finance offerings.
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