Tether is often cited as one of the most profitable business ventures in the history of capitalism. With a relatively small organisation (~100 people) generating several billions of dollars in annual profits, it is undeniably an extraordinary success. This has shaped much of the narrative around stablecoins, often creating the impression that issuing one is, almost by definition, a licence to print money.
But profitability alone is a misleading signal. Tether’s profits are the product of a very specific set of conditions: dominant market share, a high interest-rate environment, and a regulatory context that has so far allowed it to operate with limited constraints. This combination is difficult to replicate and even harder to scale further. More importantly, while Tether is extraordinarily efficient, its economic weight remains modest in the broader financial system. Generating a few billions in profit is remarkable for a crypto-native company, but it is not a titanic sum in the context of global finance. Being highly profitable is not the same as being systemically important. Becoming JPMorgan is a different game altogether, requiring a fundamentally different operating model, regulatory footprint, and role in the real economy.
Tether, in other words, is a powerful example of what stablecoins can achieve under the right conditions, but not necessarily a blueprint for what the long-term winners of the space will look like. To understand where durable value can actually be built, it helps to step back and examine the underlying monetisation options, since these choices ultimately shape what stablecoin businesses are built and what they offer to the market.
At a high level, there are only three ways a stablecoin provider can attempt to make money:
- Issuance: monetising the stock of stablecoins by investing the backing reserves
- Flow: monetising the movement of stablecoins as they circulate
- Payment acceptance: charging fees when a stablecoin is used in a specific economic transaction
The goal of this post is to examine these three monetisation models in turn, analyse their structural strengths and weaknesses, and outline where the most credible long-term opportunities in the stablecoin industry are likely to emerge.
Option 1: Issuance
The first model is balance-sheet driven. Stablecoin issuers invest reserves in short-term, low-risk assets and retain the yield. This is the USDT and USDC playbook: mechanically simple, massively scalable, and highly profitable in high-rate regimes. Economically, this is passive monetisation. Users do not opt in, risk is minimised by design, and revenue exists solely because balances remain idle.
This model currently works, but it is cyclical, politically exposed, and structurally commoditising. Monetising the stock of stablecoins turns them into utilities: profitable, but hard to defend and easy to replicate.
The main structural weakness is cyclicality. Relying on interest rates is not sustainable in a generalised low-rate environment, like the one that characterised most of the last twenty years. Crucially, this key variable is entirely outside the control of the stablecoin issuer.
In addition, as regulation standardises stablecoins and makes them uniformly safe (as MiCA does in the European Economic Area) issuance increasingly favours those that control the interface between stablecoins and their backing assets, whether bank deposits, U.S. Treasuries, or money-market funds. In this environment, incumbents with existing balance-sheet access, regulatory relationships, and treasury operations are structurally advantaged over native stablecoin projects.
That said, issuance can still work at scale in a number of configurations. One is an infrastructure model, where financial institutions issue their own branded stablecoins but rely on a specialised provider for issuance, reserve management, compliance, and reporting. A similar approach is embedded issuance, where a bank, asset manager, or payments firm internalises a stablecoin as part of its own balance sheet, using it to optimise liquidity, settlement, or internal capital flows rather than as a standalone product. In both cases, value accrues to those who operate the rails: the standardised, regulated issuance layer that sits beneath the stablecoins, invisible to end users but essential to the system’s functioning.
In the end, issuance has been fundamental in bringing the stablecoin industry to its current size, but, in my opinion, it is unlikely to produce the long-term winners of the stablecoin market. That said, this model will still give rise to strong and valuable companies, particularly those focused on providing regulated issuance infrastructure and operating the rails on which stablecoins are built, rather than competing as standalone stablecoin issuers.
Option 2: Flow
This model attempts to monetise stablecoins by charging a fee every time value moves. In my view, this is a structural dead end.
Stablecoins are adopted precisely because they enable cheap, predictable, and near-frictionless movement of capital. Introducing per-transaction fees is a regression in user experience: holders are conditioned to free transfers, and there are very few, if any, use cases where they would rationally accept paying a toll on every movement of their own money. More importantly, this model is fundamentally incompatible with adoption at scale. Any fee tied to movement is immediately visible, highly elastic, and trivially avoidable. Users reroute, wallets abstract costs away, and chains actively compete to push transfer costs toward zero. The result is that higher velocity increases usage, but not pricing power.
For these reasons, flow-based monetisation is not just unattractive; it is structurally unstable. It either collapses under competition or re-introduces friction so severe that it undermines the very value proposition of stablecoins.
Option 3: Payment acceptance
The third model attaches fees not to generic money movement, but to a specific class of transactions: payments. A payment, even when executed as a single on-chain transfer, is an economic event: a need is met, revenue is generated, and surplus is created. That surplus can tolerate rent. This is the key distinction that allows transaction-based monetisation to survive in a stablecoin environment. Interchange fees are paid by merchants in exchange for access to users, settlement certainty, and operational abstraction. This is why the model persists in traditional payments, and why it is the only transaction-based revenue model that can plausibly survive stablecoins. Unlike issuance-based monetisation, interchange is decoupled from interest rates and scales with real economic activity rather than with idle balances.
Crucially, widespread payment acceptance also acts as a powerful liquidity engine. When a stablecoin is used as payment infrastructure, liquidity does not need to be engineered or subsidised: it emerges organically from economic activity. Merchants accept the stablecoin because it brings demand and users hold it because they can spend it. This form of liquidity is structurally different from the synthetic liquidity common in many on-chain projects, which is typically manufactured through incentives or market making strategy and tends to disappear once subsidies are removed. Payment-driven liquidity is transactional, diversified, and behaviourally sticky, making it a key mechanism for bootstrapping adoption and sustaining long-term growth.
The challenge of this model is not economic, but operational: building a payment acceptance business requires distribution, merchant adoption, regulatory legitimacy, and significant operational infrastructure. The specific entry points in the payments value chain through which a stablecoin could evolve into a global payment rail are outside the scope of this post and will be addressed in my next one.
In practice, pursuing this strategy turns stablecoins into payment platforms, with all the complexity that entails: integration with existing systems, compliance and AML obligations, operational risk management, and ongoing customer support. Circle is already moving in this direction, while Tether appears less inclined to do so. From my standpoint, for native stablecoin issuers, this is an uphill battle: incumbents can leverage existing distribution and simply use stablecoins as an acceleration layer for their core businesses. Stripe is already doing this, and players like Revolut are likely to follow.
Conclusions
The stablecoin playbook is still being written. So far, the industry has overwhelmingly relied on issuance-based monetisation. Under the right market conditions, this model has proven extremely profitable and has been instrumental in scaling stablecoins to their current size. What is far less clear is whether it can remain dominant across interest-rate cycles and under increasingly standardised regulatory regimes. Over time, issuance is likely to consolidate around a small number of infrastructure providers and incumbents, rather than produce the long-term winners of the market.
Flow-based monetisation, by contrast, is structurally incompatible with stablecoins. Payment acceptance therefore stands out. It is the only transaction-based model that appears sustainable in the long run and, crucially, the only one that aligns monetisation with adoption and organic liquidity.
In this sense, the most important stablecoin businesses of the next decade are unlikely to look like today’s issuers. They will look more like payment platforms and financial infrastructure providers, with stablecoins embedded as a core layer rather than positioned as the product itself. Whether these players emerge from fintech incumbents adopting stablecoins or from crypto-native companies building credible payment infrastructure remains an open question.
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