The anticipated decline in US interest rates may adversely affect the revenues of major stablecoin issuers like Tether and Circle. Analysts warn of potential billion-dollar losses for both companies.
Impact of Rate Cuts on Tether and Circle's Revenue
According to crypto analyst MartyParty, Tether and Circle depend heavily on income from US Treasury bonds. A projected cut in rates could significantly impact their profits. Specifically, internal estimates indicate that a 50 basis point reduction could result in a $309 million annual loss, while a 100 basis point cut could double that, reaching $618 million.
Circle's Strategies for Revenue Diversification
In response to revenue risks, Circle has introduced Arc, an open Layer-1 blockchain platform dedicated to stablecoin finance. The platform will be fully compatible with the Ethereum Virtual Machine and will allow USDC to be used for transaction fees. A public testnet is planned for later this year as Circle seeks to diversify its income sources by shifting to fee-based revenue.
Tether's Increased Holdings in US Treasuries
Tether has also increased its holdings in US Treasuries to $127 billion as of Q2 2025. This positions the company as the 18th largest holder of US Treasuries globally. The $7 billion increase since the beginning of the year highlights Tether's efforts to strengthen its market position.
Expected interest rate cuts may significantly impact the revenues of Tether and Circle, prompting both companies to seek new ways to boost profits and diversify their revenue sources.
