For every rate cut of 50 bps, Tether loses $488M and Circle loses $144M in annualized revenue.

Bluechip, a stablecoin analytics organization, highlighted on X that falling interest rates pose a material revenue risk to the two largest dollar stablecoin issuers, Tether and Circle. Bluechip’s estimate is that for every 50 basis point (0.5%) Federal Reserve rate cut, Tether would lose about $488 million and Circle about $144 million in annualized revenue, reflecting how dependent their business models have become on interest earned on reserve assets. These figures are directionally consistent with Circle’s own disclosures: Circle has projected a loss of roughly $618 million in annual interest revenue for each 100 bps (1%) cut in the federal funds rate, which implies about $155 million per 25 bps or roughly $310 million per 50 bps, in the same order of magnitude as Bluechip’s modeled impact once differences in timing, assets, and assumptions are considered. The background is that both Tether and Circle generate the bulk of their income from interest on the short-term U.S. Treasury bills and other cash-equivalent instruments backing USDT and USDC. Elevated rates since 2022 produced windfall profits—analysts estimate Tether’s 2024 revenues exceeded $13 billion, largely from interest, while Circle reported around $1.676 billion in 2024 revenue, 95–99% of which came from interest income tied to USDC reserves. As the Federal Reserve moves into an easing cycle, that interest income will compress unless the stablecoin supply grows substantially. Bankless has calculated that Circle would need to increase USDC’s circulating supply by about $3.8 billion for every standard 25 bps cut just to maintain current profitability, underscoring how sensitive stablecoin issuers’ earnings are to monetary policy decisions. For crypto markets, this dynamic matters because it affects the profitability, resilience, and strategic behavior of the largest stablecoin issuers that underpin much of global crypto liquidity.

✨ AI-generated background, compiled from web sources — not editorial content.

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