Companies behind the five leading stablecoins by market capitalization are set to lose approximately $625 million in annual revenue due to the Federal Reserve’s September decision to cut the key rate by 50 basis points, according to calculations by CCData.
/2 The top 5 centralised stablecoins hold US Treasury Bills of nearly $125bn, accounting for ~80% of their reserves.
As a result, the decision to cut interest rates for the first time since March 2020 is set to result in $625mn in lost annual interest income for each 50bps cut. pic.twitter.com/KskNAhCdk8
— CCData (@CCData_io) September 27, 2024
Experts noted that US Treasury bonds constitute 80.2% of stablecoin issuers’ reserves. Collectively, they hold about $125 billion in government debt.
Tether (USDT) holds a dominant position with $93.2 billion, followed by Circle (USDC) with $28.7 billion. The top five also include First Digital USD (FDUSD), PayPal (PYUSD), and TrueUSD (TUSD) with $1.82 billion, $634 million, and $502 million, respectively.
If expectations of a further 75 basis point rate cut by the end of the year materialize, the companies’ interest income will fall by an additional $937.5 million.
In September, the total market capitalization of stablecoins increased by 1.5% to reach $172 billion. This figure has been growing for 12 consecutive months but has yet to return to the level recorded before the UST collapse in May 2022, as highlighted by CCData.
Trading volumes of stablecoins on centralized exchanges fell by 39.4% month-on-month as of September 23. Historically, the beginning of autumn is associated with the end of seasonal effects and increased trader activity.
USDT remains the most popular stablecoin on trading platforms, accounting for 77.2% of the total trading volume. FDUSD ranks second with 11.6%, followed by USDC at 10.9%.
Earlier, Tether reported a net profit of $5.2 billion in the first half of 2024, primarily generated from interest income on US Treasury obligations.