Tether and Circle Are ‘Printing Money’ But Competition is Coming

Stablecoin issuers like Tether and Circle benefit from high-interest rates on U.S. Treasuries that back their tokens, essentially printing money as holders see none of the yield. According to Wormhole co-founder Dan Reecer, new platforms such as M^0 and Agora are emerging to address this issue by allowing yield to be routed to end users instead of being entirely captured by issuers. The evolution of the stablecoin market is leaning towards real-world use cases like cross-border payments and financial services, with tokenized money market funds as potential collateral. With the current market capitalization of money market funds at about $7.3 billion—compared to over $290 billion for the global stablecoin market—Tether and Circle are urged to consider sharing their generated yield with users, which may shift expectations. A spokesperson for Tether emphasized that USDT is designed as a digital dollar, not an investment product, which presents regulatory challenges if the yield were to be shared. Financial professionals believe that tokenized money could solve existing transactional inefficiencies and improve the functionality of stablecoins.

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