Net profit per capita is $80 million: the rise of the stablecoin hegemon

If a company with only 165 employees has created a net profit of more than 13 billion US dollars, would you be amazed?

In fact, there is such a company that has achieved such amazing revenue generation - Tether. This company currently holds the largest circulation of US dollar stablecoins and dominates the market.

With the model of "coinage and bond purchase", Tether achieved a net profit of 13 billion US dollars in 2024. According to data disclosed by Matt Hougan, chief investment officer of crypto asset management company Bitwise, Tether had only 165 employees at the time, and based on this calculation, each employee created a net profit of about $80 million. The rapid development of Tether is actually a reflection of the gradual acceptance of stablecoins by the market.

"With the United States leading the global stablecoin legislation race, stablecoins are completing the role transition from 'currency anchor' to 'new global financial variable'." Zhao Wei, senior researcher at OKX Research Institute, told Jiemian News reporter.

Coinage and bond purchase

Tether seems to have taken the path of a financial "upstart".

According to Tether's 2024 financial report, the company's net profit last year exceeded US$13 billion, surpassing Citigroup in one fell swoop. Its Chinese bonds and repurchase agreement income contributed US$7 billion, gold and Bitcoin assets had unrealized gains of about US$5 billion, and other traditional investments contributed another US$1 billion.

Tether has become one of the most profitable companies in the world. What is the main business of this company? How does it make a profit?

As the issuer of USDT (Tether), Tether is responsible for the issuance of tokens. Its working principle mainly includes five steps:

1. Users deposit legal currency into Tether accounts;

2. Tether issues tokens and sends them to user wallets;

3. The issued tokens can be used for transactions, transfers, storage, etc.;

4. Users exchange Tether tokens for legal currency;

5. Tether removes the tokens from circulation and sends an equal amount of legal tender to the user.

This involves a 0.1% handling fee, but as mentioned above, most of its profits still come from investment income such as U.S. Treasury bonds. The logic behind this is that for every token minted by Tether, it will receive a corresponding legal tender income, which is equivalent to obtaining a zero-interest liability and using it for investment.

"Tether's model of 'minting coins to buy bonds' is essentially to obtain interest-free liabilities by issuing USDT and invest in short-term US bonds to earn interest spreads. Because the issuance cost is extremely low and the US bond yields are stable, it can be regarded as 'zero cost and stable returns'." Jade Shi, an industry analyst at HashKey Group, an Asian digital asset financial services group, told Jiemian News reporters.

At present, is this model sustainable? For other newcomers, can it be replicated?

Jade Shi believes that this model is sustainable in the short term under the high interest rate environment of US Treasury bonds, and may even be strengthened by the implementation of the US "GENIUS Act" ("Guidance and Establishment of the United States Stablecoin National Innovation Act"), which forces the reserve of treasury bonds. However, in the long run, it will also be impacted by the Fed's interest rate cuts or the exposure of US debt scale risks.

"For other companies, the replicability is low, mainly due to the strict compliance requirements and the network effect barriers of USDT, and other competitors find it difficult to break through the liquidity and user base barriers." Jade Shi said.

It should be pointed out that Tether is currently one of the world's top holders of US Treasury bonds.

In 2024, Tether increased its holdings of U.S. Treasuries, with direct and indirect holdings reaching $113 billion. In the first quarter of this year, Tether's U.S. Treasury exposure continued to grow to nearly $120 billion, setting a new record high. According to data on foreign holders of U.S. debt released by the U.S. Treasury Department, at the end of March, Tether's total holdings had exceeded Germany, which ranked 19th with $111.4 billion.

In terms of stablecoin issuance and circulation, Tether is firmly in the lead. In 2024, Tether's total USDT issuance reached $45 billion, which was almost equivalent to the entire market value of USDC (the U.S. dollar stablecoin issued by Circle) at the time.

According to DefiLlama data,As of press time on June 27, USDT's market value was $157.9 billion, accounting for 62% of the market share; the runner-up spot went to Circle, which was listed not long ago but whose stock price has tripled, with a market value of $61.4 billion, accounting for 24% of the market share. The gap between the two is still large, and other market participants only account for 13% in total.

Currently stablecoins are mainly used in payment and transaction scenarios, and Tether has outstanding advantages in this regard.

“According to DeFiLlama data, USDT natively supports 18 blockchains, and bridge support is as high as 91 blockchains, occupying a monopoly position in payment and transaction scenarios.According to Coingecko data, USDT's average daily trading volume has long ranked first in the 24-hour trading volume, and it is the most commonly used trading pair base currency on exchanges.”Jade Shi analyzed.

The first-mover advantage and unshakable liquidity have become the important reasons why Tether stands out from the crowd.

Zhao Wei said that The reason why Tether's USDT occupies a dominant position in the stablecoin market is first of all due to its first-mover advantage and wide market acceptance. “USDT was launched in 2014 and is one of the earliest stablecoins. It seized the market opportunity and quickly became the preferred trading pair underlying asset of cryptocurrency exchanges. In addition, due to the brand effect of early entry into the market, USDT has been widely integrated in major global exchanges such as OKX and Coinbase, forming a strong network effect. In particular, Tether quickly penetrated into the crypto trading ecosystem through its close relationship with Bitfinex in the early days, further consolidating its market position.”

“ text="">In addition to its first-mover advantage, USDT's liquidity advantage and operating strategy are also the key to its success. High liquidity makes it the preferred tool for traders to hedge volatility and make fast fund transfers. At the same time, Tether ensures the availability and convenience of USDT through multi-chain support and in-depth cooperation with centralized exchanges. " Zhao Wei added.

Ten Years of Rise

Tether is a veritable pioneer in stablecoins.

In 2014, Tether's predecessor, Realcoin, was officially launched and was founded by three co-founders: Brock Pierce, Reeve Collins and Craig Sellars.

Its corporate entity Tether Holdings Limited was originally registered in the tax haven British Virgin Islands. According to its official statement, it was moved to El Salvador in January 2025 and is now named Tether Holdings, S.A. de C.V.

Tether's parent company iFinex also owns a well-known cryptocurrency exchange - Bitfinex. Tether’s current executive team includes CEO Paolo Ardoino; Chairman Giancarlo Devasini, who is also one of the co-founders of Bitfinex; Chief Financial Officer Simon McWilliams; and Chief Operating Officer Claudia Lagorio. At the Bitcoin 2025 conference, Paolo Ardoino delivered a keynote speech and highlighted the financial disintermediation function of stablecoins.

He said, what do you think of Tether? He believes thatTetheris completely different from traditional technology companies and financial institutions. Financial companies and large technology companies usually rely on a series of intermediaries, and financial intermediaries charge fees from each transaction, while large technology giants control the data. Fundamentally, "we have lost autonomy in both money and data." Tether's goal is to use technology to develop relevant tools to help people get rid of the shackles of these intermediaries.

This is actually the general vision of the currency circle for virtual currency-to achieve decentralized finance. Among various virtual currencies, the market recognition of stablecoins is gradually increasing.

To analyze the market acceptance of stablecoins, we must first answer a question: Why did stablecoins come into being?

Back to January 3, 2009, when Satoshi Nakamoto mined the Bitcoin Genesis Block #0 and received 50 Bitcoins as a reward. So far, virtual currency has ushered in the 16th anniversary of its development, and Bitcoin has also embarked on a period of rapid development. The price has soared to $100,000 per coin.

Despite the strong momentum, the price volatility of virtual assets has long been criticized by the market. At this time, the emergence of stablecoins is equivalent to giving the market another choice. Because they are anchored to specific assets, the price of stablecoins is relatively stable, and it is easier to accumulate value trust. In terms of transaction and payment scenarios, the security factor is higher. In addition, due to its stability, it can also be used as a tool to fight inflation and hedge value.

"Tracing back to the source, stablecoins were born out of the urgent need for price stability in the cryptocurrency market and the trend of integration between the traditional financial system and blockchain technology. They acted as a 'pricing tool' in the crypto market, meeting the needs of traders for low-volatility assets, and providing efficient liquidity for crypto exchanges." Zhao Wei explained thatAfter the emergence of early cryptocurrencies such as Bitcoin, their sharp price fluctuations limited their practicality as daily transaction media. The market needs an asset that can combine the decentralized nature of blockchain with the stability of legal currency.

The technical level also provides support. "Technological progress and changes in the regulatory environment have also created conditions for the development of stablecoins. The maturity of blockchain technology makes the issuance and management of stablecoins feasible, and the widespread application of smart contracts further reduces development costs." said Zhao Wei.

It is worth pointing out that financial inclusion is actually one of the catalysts for stablecoins. "The high cost and low efficiency of cross-border payments in the global financial system and the lack of availability of financial services in some regions have also provided soil for the emergence of stablecoins. Stablecoins began to rise around 2014 by anchoring legal currencies or other assets (such as the US dollar and gold). For example, BitShares launched BitUSD and the subsequent TetherUSDT, which filled this market gap." Zhao Wei said.

In the view of industry insiders, stablecoins are expected to become the "darling of currency" in emerging markets. "Take Africa as an example. Many people in Kenya do not have bank accounts. In the absence of banking services, stablecoins fill this gap through mobile wallets. More importantly, the payment function of stablecoins is not limited to the country, it is global. As long as there are mobile wallets and stablecoins, they can make payments globally. This is the real means to make financial services accessible to everyone, truly solving the problem of accessibility, and thus achieving the goal of inclusive finance." Xiao Feng, chairman and CEO of HashKey Group, said in an interview with Interface News.

The pain of compliance

The problem is, how to ensure the stability of stablecoins?

"The stability of the US dollar stablecoin comes from its anchoring mechanism with the US dollar. Usually, stablecoin issuers adopt a 1:1 reserve mechanism, supported by highly liquid assets such as US dollar cash, short-term US Treasury bonds, and bank deposits to ensure that its value is consistent with the US dollar." Jade Shi said.

The bills currently being promoted in many places also emphasize the importance of reserve assets, including the

"In order to enhance transparency and trust, according to the provisions of the US GENIUS Act, stablecoin issuers must also disclose the status of reserve assets on a regular basis, such as publishing audited reserve reports every month, and strictly prohibiting the pledge or misappropriation of reserve assets." Jade Shi added.

And it is precisely on the issue of reserve assets that Tether has been criticized. Tether said that they are a completely transparent company, which is generally not recognized by the industry.

First, in terms of reserve disclosure, Tether stated that each Tether token is 100% backed by reserves, including traditional currencies, cash equivalents and other assets, also including

But in the eyes of industry insiders, "Tether's reserve asset disclosure is still lagging behind, and its auditing agency has not been officially recognized by the United States, and its transparency is seriously lacking."

Jade Shi pointed out.

Secondly, in terms of reserve types, according to Tether's reserve report in the first quarter of this year, approximately 80% of its reserve assets are cash and cash equivalents and other short-term deposits.

“This means that although the liquidity ratio is high, there are still certain potential risks, especially in extreme market environments, there may be problems with insufficient reserve liquidity.”Jade Shi said.

It is worth noting that Tether's reserve assets include Bitcoin and gold. Tether explained that "it believes they are tools to fight inflation." However, the price fluctuations of Bitcoin and gold are relatively large. Are their value-preserving functions trustworthy?

Tether said that due to the large fluctuations in the exchange rate between Bitcoin and the US dollar, the US dollar value of Bitcoin held by Tether may change significantly after the release of its latest reserve report.

“We

According to data disclosed by Tether, as of the first quarter of this year, the company's total assets were US$149.3 billion; total liabilities were US$143.7 billion, and net equity was approximately US$5.6 billion.

In fact, regardless of the pros and cons of the reserve assets, the anchoring mechanism of the assets themselvesalthoughcan theoretically guarantee the price anchoring of stablecoins, it will still

“Currently, the US dollar stablecoin is deeply bound to US Treasuries, which may make it face tremendous pressure in extreme market conditions. For example, in the event of a large-scale run, the issuer may be forced to quickly sell Treasury bonds to cash out, which will lead to a surge in Treasury yields, a shrinkage of reserve assets, and even a vicious cycle.”Said Jade Shi.

Jade Shi gave an example,The Silicon Valley Bank crisis in 2023 is a typical example. At that time, USDC's issuer Circle suffered a severe run due to the market's concerns about liquidity risks due to its $3.3 billion reserve assets deposited in Silicon Valley Bank. USDC's price was once de-anchored and fell to about $0.87.

“In general, the price anchoring of the US dollar stablecoin depends on the security and liquidity of the reserve assets, but the volatility of the reserve assets, market liquidity pressure, and extreme situations such as runs may pose a threat to the stability of the stablecoin. Therefore, further strengthening reserve disclosure and supervision and optimizing the allocation of reserve assets are important directions to ensure the effective anchoring of stablecoins and the US dollar.

In terms of compliance issues, Tether has suffered repeated setbacks. For example, in 2021, the U.S. Commodity Futures Trading Commission (CFTC) announced that

If the US "GENIUS Act" is implemented, I believe that the compliance ropes of stablecoins will inevitably be further tightened. At that time, what impact will Tetherbe affected?

Jade Shi said that it seems that Tether has not actively adapted to the relevant requirements, and Tether's main user groups are concentrated in the offshore market.