A stablecoin does not earn yield by existing. USDT and USDC are built to hold a fixed value, usually $1, and a token sitting in a wallet generates nothing on its own, according to Stripe’s own explainer of the mechanism. Yield only shows up once that dollar is put to work — lent to a borrower, deposited into a trading pool, or used to fund a position that someone else pays to hold.
That single fact splits into two separate income streams that get lumped together under the word ‘yield,’ and mixing them up is the most common misreading of how any of this works.
The interest issuers earn — and keep
Fiat-backed stablecoins like USDT and USDC are backed by cash and short-term, low-risk assets, according to the BIS brief. Those reserves earn interest in the ordinary way any such holding does. The Bank for International Settlements, in an October 2025 FSI brief, describes USDT and USDC as ‘payment stablecoins’ — tokens that are ‘not inherently designed to generate on-chain returns to holders.’ The interest earned on the reserves stays with the issuer.
The headline description of Circle’s own SEC EDGAR financial filing ties USDC revenue to the daily income generated from the reserves backing USDC, net of fees and expenses. This page has seen only that headline-level description of the filing, not the full document, so it does not quote the filing directly — but the description itself confirms the income accrues to Circle, the corporate entity, not to whoever holds the token. A promotional course page hosted by Onchain.org — which draws its figures from a mix of outlets including Tether.io, Yahoo Finance, Blockworks and TheBlock without specifying which source backs which number — cites a Tether attestation for the first half of 2024 reporting a $5.2 billion profit, which it attributes largely to Treasury bills yielding 4.72%. This page has not independently verified that figure. If accurate, that profit belonged to Tether, the company, not to USDT holders, since USDT does not distribute reserve interest to whoever holds the token.
Regulators have converged on this split. The BIS brief states that payment stablecoin issuers are ‘uniformly prohibited from remunerating balances’ — meaning the law, not just convention, keeps that reserve interest with the issuer in most jurisdictions the brief examined.
The five ways a holder can earn yield anyway
Because the issuer keeps the reserve interest, anyone who wants a return on a stablecoin has to move it somewhere else. The mechanisms that generate that second kind of yield appear consistently across the BIS brief, Spark Money’s tool, BitGo’s explainer, Chainlink’s education page and Eco’s guide, though the specific numbers each cites are their own snapshots and go stale quickly.
Treasury-bill pass-through. An issuer or fund manager holds T-bills and forwards the coupon to token holders, minus a fee. Spark Money reported that with three-month Treasury bills yielding approximately 3.65% as of May 2026, on-chain wrappers of that yield typically offered 3.5% to 4.65% after fees. It separately reported Sky Protocol’s savings-rate token sUSDS reaching $6.49 billion in supply by the first quarter of 2026, up 71.7% from the end of 2025 — the largest yield-bearing stablecoin position by that measure, per Spark Money. This is the most direct pass-through of the reserve interest that, in a payment stablecoin, would stay with the issuer instead.
DeFi lending. Borrowers post crypto collateral and pay interest to borrow stablecoins for leverage or arbitrage; lenders earn a share of that interest. Spark Money reported, as of mid-2026, that Aave V3 offered roughly 3% to 6% on USDC and USDT depending on chain and utilization, Compound V3 returned roughly 3% to 5%, and Morpho Blue vaults ranged from about 4% to 8%. Rates move with borrowing demand: when more people want to borrow, rates rise; when demand falls, they compress. Spark Money also reported that an April 2026 exploit involving a Kelp DAO bridge produced roughly $196 million in bad debt on Aave and triggered $6.6 billion in withdrawals — a reminder that lending yield compensates a real credit and smart-contract risk, not a free lunch.
DEX liquidity fees. Liquidity providers on exchanges such as Curve and Uniswap earn a cut of the small fee traders pay on each swap between stablecoin pairs, per Spark Money’s breakdown. Protocols sometimes add token rewards on top of that base fee income; Curve’s CRV emissions, for instance, decline by roughly 15.9% a year on a fixed, hardcoded schedule, according to Spark Money, meaning any yield attributable to those emissions is built to shrink over time.
Basis, or delta-neutral, trades. Ethena’s USDe holds a long position in staked assets while simultaneously shorting an equivalent futures position to hedge that exposure, according to Chainlink’s education page; the yield combines staking rewards on the long side with the funding rate paid by leveraged long traders on the short side, per Spark Money. This yield can flip. Spark Money reported that a flash crash in October 2025 sent funding rates to negative 42%, and that a prolonged negative funding period in August 2024 pushed the yield on Ethena’s sUSDe to an all-time low of 4.1% and triggered a $500 million contraction in USDe supply. Spark Money also reported that Ethena’s 90-day trailing average APY on sUSDe stood at 11.8% as of April 2026, and that Ethena held an insurance fund of roughly $61 million as of March 2026, equal to about 1.1% of supply, to absorb losses during negative-funding periods — a buffer whose adequacy in a sustained downturn Spark Money describes as debated.
Protocol incentives. Some yield is simply a subsidy: a protocol distributes its own governance token to attract deposits during a growth phase. BitGo’s explainer distinguishes this from revenue-backed yield and advises institutions to ask whether a return would survive if the incentive were removed — a distinction Eco’s 2026 guide draws the same way, describing token incentives as a temporary layer ‘not a durable source’ sitting on top of the four underlying mechanisms.
What the GENIUS Act does and does not ban
The US GENIUS Act, signed into law in July 2025, prohibits stablecoin issuers from paying yield directly to holders, according to Spark Money. That closes off one route — an issuer simply crediting interest to a holder’s balance — but it does not touch the five mechanisms above, which route the yield through a third party: a lending protocol, an exchange, or a DeFi vault. The BIS brief describes regulatory treatment of those third-party, or CASP-provided, yields as inconsistent across jurisdictions: some ban them outright for everyone, some restrict them to professional investors only, and some impose no explicit prohibition at all. In other words, the law reaches the issuer’s side of the split described above, not the deployment side.
What this page does not tell you
This page cannot verify Tether’s reserve composition or per-employee profit figures independently. The only source carrying those specific numbers is a course-marketing page hosted at onchain.org, which cites CoinMarketCap without a retrievable date and states a per-employee profit range — $30 million to $120 million — that it itself describes as varying ‘depending on the source’ without naming those sources. Those figures are not repeated above as fact for that reason.
The SEC EDGAR filing cited here was made available to this page as a headline description only. This page can state what that description says about how Circle’s USDC revenue is calculated; it cannot quote the filing’s own language or describe anything else the document contains, because the fuller filing was not reviewed.
Every APY figure attributed to Spark Money or Eco in this piece — Aave and Compound rates as of mid-2026, sUSDe’s 11.8% trailing average as of April 2026, T-bill wrapper yields as of May 2026 — is a dated snapshot. Yield in lending markets and basis trades moves with utilization and funding conditions day to day, so none of these numbers should be read as current by the time this page is read.
Spark Money puts BlackRock’s BUIDL fund at approximately $2.4 billion in assets under management; Eco’s guide states the same fund holds ‘$3.0B AUM.’ Neither source dates its figure precisely enough to say whether the gap reflects real growth between the two reports or simply inconsistent reporting, and this page cannot resolve which number is more current.
This page draws its regulatory picture from the BIS brief’s coverage of the US, the EU, Hong Kong and Singapore, published October 2025. It does not cover other jurisdictions, and it does not track any regulatory change after that brief’s publication date.
Sources
Every fact above is attributed to one of these reports. Where they disagree, the article says so.