Wormhole co-founder criticizes Tether and Circle: Stablecoin giants enjoy profits from hundreds of billions in US bonds but do not share with users.

During the DAC event held in mainstream CEX in Latin America in 2025, the cross-chain protocol Wormhole's Dan Reecer publicly criticized stablecoin issuers Tether and Circle, accusing them of earning huge interest by holding 100s of billions of USD in US Treasury bonds in a high-interest-rate environment, while not sharing any profits with users. Tether's net profit in the second quarter reached 4.9 billion USD, and the company's valuation soared to 500 billion USD, while Circle's USDC faced similar scrutiny. This controversy highlights the inequality in the stablecoin business model and may drive users towards emerging profit-sharing platforms, reshaping the industry landscape.

Controversy Over Stablecoin Profit Distribution Surfaces

At the DAC 2025 event, Dan Reecer, co-founder of the cross-chain protocol Wormhole, pointed out that stablecoin giants Tether and Circle are taking advantage of the high interest rate environment to gain substantial profits by holding large amounts of U.S. Treasury bonds, but they have not returned the profits to users. Reecer emphasized that users holding USDT or USDC are essentially lending cash to the issuers, but in return, they only receive non-yielding digital dollars, a model that is difficult to sustain in the long run. Data shows that Tether reported a net profit of $4.9 billion in the second quarter of 2025, with its latest funding round valuing it at $500 billion, reflecting the windfall profits of stablecoin issuers during a tightening monetary policy cycle. This criticism has sparked widespread discussions in the industry about the fairness of stablecoins, especially in the context of the rise of DeFi and yield-generating products.

Dan Reecer's Sharp Criticism: Why Users Are Losing Money

Dan Reecer bluntly stated in his speech that the stablecoin businesses of Tether and Circle resemble "printing money". Users holding USDC or USDT are indirectly losing money, as the issuers monopolize all the treasury bond yields. He cited that in an environment of persistently high interest rates, users will ultimately demand a share of these profits, or they might turn to other yield-oriented platforms. Reecer further pointed out that some emerging protocols have begun attempting to distribute stablecoin yields to users, for example, through in-app rewards or direct dividends, which could pose a challenge to traditional stablecoins. From a market perspective, this trend may accelerate the evolution of stablecoins from mere payment tools to yield-bearing assets, driving innovation in the industry.

Tether's Official Response: Positioning and Risk Considerations

In response to criticism from Reecer, a Tether spokesperson stated that USDT is positioned as a digital dollar rather than an investment product, with its main value being a tool for emerging market users to combat inflation and banking instability. The spokesperson emphasized that in regions with annual inflation rates as high as 50% to 90%, the stability of USDT is far more important than a few percentage points of yield, and sharing profits would change the nature, risk profile, and regulatory treatment of stablecoins. Although Circle did not respond directly, similar logic may apply to USDC. This position reflects the cautious attitude of stablecoin issuers towards regulatory compliance, while also highlighting the fundamental differences between traditional models and emerging yield-generating products.

Industry Trends and Investment Perspectives

As the high interest rate environment continues, the issue of stablecoin yield distribution may become a market focus. Investors can pay attention to emerging yield-sharing platforms, such as some DeFi protocols or blockchain projects, which directly distribute profits to users through smart contracts, reducing centralized risks. At the same time, users need to weigh security and yield when choosing stablecoins, such as considering diversifying holdings of various stablecoins or exploring yield products on mainstream CEX. In the long run, this controversy may drive regulators to intervene, clarifying the classification of stablecoins and the rules for yield distribution, thereby affecting the evolution of the entire cryptocurrency market.

Conclusion

The controversy revealed during the DAC 2025 event highlights the deep-seated contradictions in profit distribution within the stablecoin industry, with Tether and Circle's business models facing unprecedented challenges. As users' demand for returns grows and new platforms innovate, the stablecoin market may undergo a reshuffle. Investors should closely monitor regulatory dynamics and technological developments to seize market opportunities.

Disclaimer: This article is for informational purposes only and does not constitute any investment advice. The cryptocurrency market is highly volatile, and investors should make decisions cautiously.