Tether's (USDT) business model = buying US short-term Treasuries with user funds and directly profiting from the yield, with an annual 1.5 兆円·40 -person setup

Wiki route

This entry sits under fintech index. Read it with Japan Financial Regulation — Legal Framework for Tokens, Crypto Assets, and Payments for adjacent context and Three-Layer Structure of Japan's Stablecoin Regulatory Regime (JPYC, USDC, Project Pax) for the broader system boundary.

[!info] TL;DR Tether (the USDT issuer) invests the user funds it holds in US short-term Treasuries and books the yield directly as profit, earning roughly 1.5 兆円 in profit per year with a 40 -person setup. Its origin was a gray-zone-ish start of issuing USDT by collateralizing BTC/ETH, but it scaled up by happenstance. However, due to a KYC-layer mismatch, it cannot enter the institutional-investor market.

Conclusion

Reasoning

• Industry insiders’ assessment: an origin described as “making money by happenstance” and “at first like a scam-ish business”
• The structure of “directly profiting” from short-term interest rates in the stablecoin market is similarly held by regulated stablecoins (USDC · JPYC · bank-issued deposit tokens), but Tether maximizes its profit margin through scale × minimization of KYC costs
• Profit surged with the tailwind of the US short-term-interest-rate upswing period (2023-2025); while the rise in Japanese yen interest rates is sluggish, Japanese SC issuers cannot create an equivalent profit structure (the same “who takes the interest” question is organized in Stablecoin interest distribution economics)
• It structurally cannot enter the institutional-investor market due to Institutional Market Stablecoins = Only Bank-Issued Deposit Tokens Are Structurally Viable; its main uses are retail / on-exchange / overseas remittance

Applicable When

• When discussing stablecoin economics (yen-denominated SC issuance design / commercial settlement design, see Reserve Interlock Flywheel · BUIDL ↔ USDC Systemic Circular Dependency)
• The “is a yen SC profitable?” discussion → while Japanese yen short-term interest rates are low, the same business model does not hold; SC economics depend on the interest-rate environment
• Discussion of the design of where user funds are invested → a bank-issued SC has the same structure of “funds are deposits, investment is banking business”
• When analyzing a proposal that tries to bring in USDT → can be used as a reason why it cannot enter the institutional market

Source

• Public: Tether’s public financials (annual profit · investment composition)
• Public: Tether’s founding background (the BTC/ETH collateralization start)
• Consistency: the USDT-mention portion of Three-Layer Structure of Japan's Stablecoin Regulatory Regime (JPYC, USDC, Project Pax)

Related

• Wiki Index
• Institutional Market Stablecoins = Only Bank-Issued Deposit Tokens Are Structurally Viable
• onchain-finance-vs-crypto-bifurcation
• Three-Layer Structure of Japan's Stablecoin Regulatory Regime (JPYC, USDC, Project Pax)