Stablecoin Issuers Profits: How Does Tether Make Money?

One can imagine dozens of ways crypto companies make money when their tokens rise in price, but stablecoin issuers have different economics: the rate is pegged to $1, volatility is minimal, which means the source of revenue is hidden deeper in operations and reserve management. Then what's the largest stablecoin issuer's revenue model, and how does Tether make money? Where exactly does yield arise with a fixed peg, what role does the Tether revenue model play in day-to-day turnover, what do interest on liquid instruments deliver, and how do fees and redemption procedures affect the final result?

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Tether Revenue Model

Tether operates in the primary market: it accepts fiat from verified clients, issues an equivalent amount of USDT, and records the circulation on its books. The facts that circulation is usually published daily and that the issuer's assets exceed liabilities are defined within its Transparency framework. The company directs the received funds into reserves, which ensure redemptions at par and readiness to reduce circulation during redemptions. Generally speaking, the basic flow looks like this: KYC and a fiat deposit – issuance and recognition of the amount in circulation – redemption with burning of the corresponding tokens and returning a share of reserves to the client in fiat form. Secondary turnover at exchanges and OTC providers occurs outside this chain; therefore, liquidity management and execution of redemptions are concentrated in the primary mint–redeem loop. So the rules and thresholds apply only to primary operations and serve as a tool for managing the load on this channel.

How USDT Generates Profits

Tether monetizes reserve liquidity rather than token price volatility: it places retained fiat into cash & cash equivalents with short duration and high convertibility. Of course, there are many variables, and the scale of the interest income stream depends on market rates, the average size, and the structure of reserves. That is why the company uses short, liquid instruments that allow quick conversion of positions into cash to fulfill redemptions. At the same time, Tether separates recurrent profits from interest on the liquid basket from the results of revaluation of individual positions, if such assets are present in reserves and are reported separately.

Tether Fees and Redemptions

Tether provides a fixed set of parameters and figures for operations in the primary channel. For example, the minimum size of a single purchase or redemption operation via the website is 100,000 USD. The purchase fee is 0.1%. The redemption fee is the greater of 0.1% or 1,000 USD. Before starting operations, the client completes KYC and pays a 150 USD₮ verification fee according to the regulations. By default, the verification fee is non-refundable, but it can be credited toward future operations for fiat-pegged tokens. Upon redemption, the company burns the corresponding amount of USDT, reduces liabilities, and transfers an equivalent share of reserves to the client in fiat form; Tether also notes that legal terms allow it to manage the redemption process under certain circumstances.

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Tether Reserves Breakdown

Let's look in more detail at USDT backing and yields, which define the composition of the liquid basket and the sources of yield. Liquid cash & cash equivalents simultaneously cover redemptions and form the interest base. Tether records these provisions in the Consolidated Reserves Report with an independent opinion under ISAE 3000, where assets, liabilities, and excess reserves are disclosed. For example, as of 31 Mar 2024, Tether reported Reserves $110.289B, Liabilities $104.028B, Excess reserves $6.262B; for fiat-denominated stablecoins on that date, the share of cash & cash equivalents was 90%.

The structure of reserves is oriented toward money-market instruments, where liquidity and convertibility into fiat come first. It is within cash & cash equivalents that interest income arises, which Tether classifies as recurrent or operating profits, separating it from the results of revaluation of individual positions. Such a separation of income sources makes the picture transparent: redemption support relies on liquid assets, and excess reserves serve as an additional buffer. As a result, Tether follows a consistent logic: the composition of the liquid basket determines the interest income base, and excess reserves show how much capital remains after covering liabilities at par.

USDT Treasury Bills Income

U.S. Treasuries form a core component within cash & cash equivalents. Tether distinguishes two participation channels: direct exposure to the Treasury securities themselves and indirect exposure through liquidity mechanics such as reverse repo secured by U.S. Treasuries and allocations to money market funds. 

For example, for Q1 2024, in excess of $90B of total exposure was recorded, including indirect positions. As of 30 Jun 2025, the company reported $127B total U.S. Treasuries exposure, of which $105.5B direct and $21.3B indirect. The repo channel makes it possible to quickly attract or release short-term liquidity against the collateral of Treasuries, and MMFs provide a place to park funds within money-market mandates. So, direct and indirect exposure define the technical configuration of participation in Treasuries and the scale of allocations that Tether regularly updates and publishes in its reports.

Tether Lending and Investments

There is another important part of the Tether yield. Namely, the company separates the basic liquid basket from non-basic positions: secured loans and investments in individual assets, including Bitcoin and Gold. These elements aren't part of cash & cash equivalents, don't participate in redemption execution, and are disclosed separately in the Consolidated Reserves Report. Such a taxonomy fixes the boundary between redemption backing and the channel where results are formed outside the interest base of the liquid basket.

So, secured loans describe collateralized credit claims whose economic role is intentionally separated from operational liquidity: they don't increase the availability of funds for primary redemption. They aren't part of those recurrent or operating profits that the company associates with interest on cash & cash equivalents. This is an independent asset category where risk management relies on the perimeter of consolidation and reporting discipline: composition and valuations are fixed as of the reporting date, pass external assurance, and are comparable across periods. This means that any changes in secured loans affect total assets and the period's result, but don't change the par-value redemption rule and don't reallocate liquidity out of cash & cash equivalents.

A relatively similar situation applies to Tether's investment positions: for example, Bitcoin and Gold don't create an interest stream and aren't included in cash & cash equivalents; therefore, their contribution is reflected through revaluation results and is articulated separately in quarterly communications. This aims to create clean decomposition: the stable base of results is generated within the liquid basket, while the volatile component depends on market dynamics of investment assets and credit claims. And again, this supports protection of the redemption process: excess reserves and the shareholder equity metric function as a cushion above liabilities within which the company holds non-basic positions without affecting backing principles and redemption procedures.

Is Tether Profitable?

OK, but what do the numbers show regarding how profitable Tether really is? Judging by their reports, they have reason to be proud. For Q1 2024, they posted a net profit of $4.52B, of which about $1B accounted for net operating profits, "primarily derived from US Treasury holdings," and the remaining contribution was formed by results on Bitcoin and Gold. At the same cut-off, they show shareholder equity of $11.37B, and excess reserves of $6.262B as a buffer above liabilities.

But is there a consistent increase, and is this not just a one-off example of a good report? Naturally, the company has gone through different stages and faced different challenges that are clearly expressed in the numbers, but, for example, the latest report for Q2 2025 also performed well. In particular, Tether recorded net profit of about $4.9B, and for H1 2025, $5.7B, where recurrent profits YTD were $3.1B and the contribution of BTC and Gold was $2.6B. At the same time, it should be taken into account that the variability of the final net profit is explained by revaluation of non-basic assets, which the reporting keeps separate from cash & cash equivalents and backing.

Tether Transparency & Attestations

Although at the beginning of its existence, this is precisely where Tether experienced various difficulties, today the company provides a good level of transparency and independent assessments. In particular, they confirm the composition of reserves at the group level through quarterly attestations under ISAE 3000 performed by BDO. The result of this review is the regular publication of the Consolidated Reserves Report with a detailed classification of assets and liabilities and the Attestation Report with BDO's independent opinion on the correctness of presentation as of the reporting date within the stated methodology and consolidation perimeter.

If we delve a little into the essence of these reviews, they cover the key supporting elements of the CRR: comparison of assets and liabilities, the presence and classification of positions, identification of non-basic items relative to cash & cash equivalents, and the reflection of excess reserves as a capital buffer. BDO assesses whether the information presented complies with the stated principles of accounting and consolidation as of the report date and whether it is consistent with disclosures that describe the structure of reserves.

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Conclusion

The world's largest stablecoin issuer, Tether, today shows that its asset is backed, reserves are transparent, and yield is sufficient to support operations, develop new products, and enter new markets. This isn't an experimental project like Terra; learn in our detailed breakdown, Why Did Terra LUNA Fail: Lessons From Terra Crash. And this isn’t even a proven but not yet established operating model. This is a key infrastructure player on whose participation and assets a huge part of the entire crypto industry rests. Stay tuned for the latest updates and opportunities in the new economy, crypto industry, and blockchain developments.

Frequently Asked Questions

How Does Tether (USDT) Actually Make Money?

Tether's primary source of income is interest on reserves within cash & cash equivalents. The key basket includes the short-term money market, and fees on the primary channel complement this model.

Does Tether Earn Interest from U.S. Treasury Bills and Cash Equivalents?

Yes, interest accrues on exposure to U.S. Treasuries and other liquid money-market instruments within cash & cash equivalents. This stream is recorded as recurrent or operating profits, separately from the revaluation results of other assets.

How Do Redemptions Affect Tether's Earnings and Reserve Composition?

Redemption burns USDT, reduces liabilities, and withdraws an equivalent amount from reserves – the interest-accrual base shrinks to a new average level of assets. With large outflows, the issuer first uses the most liquid segments of cash & cash equivalents – repays or unwinds reverse repo, reduces shares in money market funds, and sells the nearest-maturing T-bills, maintaining short duration and convertibility.

Are Tether's Profits Affected by Interest Rate Changes?

Unambiguously yes, because Tether is the largest issuer of U.S. dollar stablecoins and one of the key holders of U.S. Treasuries. An increase in short-term rates raises money-market yields and increases operating profits as the portfolio rolls over; a decline does the opposite. The speed of pass-through to P&L is determined by duration and the share of instruments with floating or quickly resettable yields.

What Risks Could Impact Tether's Income (Rates, Redemptions, Regulation)?

Rate risk – changes in short-term rates affect the level of interest income. Liquidity risk – large redemptions compress the active base on which interest accrues and temporarily change the mix of liquid instruments. Regulatory risk – constraints on eligible assets, jurisdictions, or procedures can narrow the income basket. Counterparty and operational risks in liquidity channels, such as reverse repo, and in the settlement infrastructure. Market revaluation risk of non-basic positions (for example, Bitcoin and Gold) affects the non-recurring part of results, while not affecting cash & cash equivalents and backing.