Crypto
How the Fed's Rate Cuts Could Shave Millions in Stablecoin Issuer Income
:max_bytes(150000):strip_icc()/INV_StablecoinsonaScreen_GettyImages-1241851893-48842e0b8e6d448ba2300a3c0c5d1423.jpg?ssl=1 "How the Fed's Rate Cuts Could Shave Millions in Stablecoin Issuer Income")
Key Takeaways
- The Federal Reserve’s recent decision to cut interest rates will lead to lower revenue for stablecoin issuers, according to a new cryptocurrency industry report.
- Issuers of stablecoins have held U.S. Treasurys as a way to earn a return on the reserves backing the digital assets they issue.
- Stablecoin providers hold nearly $125 billion of U.S. Treasurys, and each 50 bps rate cut is expected to lead to a $625 million drop in annual interest income derived from these assets.
- If rates continue to fall, as expected, stablecoin providers may need to look into alternative reserves to back their digital assets, a crypto industry executive forecast.
Stablecoin issuers could be looking at lower income as the Federal Reserve (Fed) kicked off its first rate cut cycle since 2020.
Each 50 basis point cut by the Fed could lead to a $625 million drop in total annual interest income for stablecoin issuers, according to a new report from digital asset data provider CCData.
Those hits could quickly add up as the Fed itself expects cuts totaling 50 basis points by the end of this year, and another 100 basis points by the end of next year.
Why Would A Rate Cut Affect Stablecoins?
Stablecoins are cryptocurrencies whose value is pegged to another cryptocurrency. Some of the most popular stablecoins have their value pegged to the U.S. dollar and keep a reserve in cash or equivalent investments—often U.S. Treasurys—to maintain that peg.
Centralized stablecoin providers, such as Tether (USDTUSD) and Circle (USDCUSD), have relied heavily on their holdings of U.S. Treasurys earning interest over the past few years as high interest rates drove up Treasury yields.
U.S. Treasurys make up the vast majority of reserves held by stablecoin issuers, at just over 80%. This amounts to holdings of nearly $125 billion worth of Treasurys.
Tether, the largest stablecoin by market cap, alone holds $93.2 billion worth of U.S. debt, which accounted for much of that digital asset company’s $5.2 billion of profits in the first half of 2024, the CCData report said.
Bitcoin.com Director of Engineering Andrei Terentiev speculated on social media that lower interest rates could eventually push stablecoin providers and other financial institutions into riskier assets in an effort to earn a return on their reserves.
“With lower yields on safer assets, institutions often shift their focus toward ‘risk-on’ assets,” Terentiev posted on the platform X. “Think stocks, crypto, and other investments that offer higher potential returns but come with greater risk,” he wrote.
Kraken Valued at $13 Billion After Deutsche Börse Stake
Deutsche Börse has taken a minority stake in crypto exchange Kraken, marking one of the clearest signs yet of Europe’s largest market operator deepening its exposure to digital assets.
The German exchange group said it invested $200 million in Payward, Kraken’s parent company, securing roughly a 1.5% fully diluted ownership. The transaction values Kraken at about $13.3 billion, according to reporting by Bloomberg.
The move builds on an existing relationship between the two firms and signals a broader push to integrate traditional financial infrastructure with crypto markets. The partnership is expected to focus on regulated offerings, including tokenized assets and derivatives, while improving liquidity for institutional clients.
As part of the collaboration, Kraken will integrate with 360T, Deutsche Börse’s foreign exchange trading platform. The connection is designed to provide Kraken users with access to bank-grade foreign exchange liquidity, potentially streamlining the conversion between fiat currencies and digital assets.
The companies also plan to expand the use of Kraken Embed, a service that allows institutions to offer crypto trading and custody under their own brands. The initiative targets banks, fintech firms, and asset managers seeking to enter the digital asset space without building infrastructure from scratch.
Further developments are expected, subject to regulatory approval. These include enabling trading of derivatives listed on Eurex, Deutsche Börse’s derivatives exchange, through Kraken’s platform.
The investment underscores a growing convergence between established financial institutions and the crypto sector. For Kraken, the backing from Deutsche Börse provides capital and strategic alignment with one of Europe’s most influential financial market operators. For Deutsche Börse, the stake offers a direct foothold in a global crypto platform at a time when competition for digital asset infrastructure is intensifying.
The deal also reflects a broader trend of legacy financial firms moving beyond exploratory partnerships toward equity investments in crypto companies. By combining trading, custody, and tokenization capabilities, both firms are positioning themselves to capture a larger share of institutional flows into digital assets.
Key Takeaways:
- Alameda moved $16 million worth of SOL to a wallet linked with repayment efforts, signaling ongoing FTX creditor payouts.
- Alameda still holds 3.5 million SOL ($294 million), meaning supply overhang may impact solana markets.
- FTX-era asset releases since 2022 suggest continued distributions could shape liquidity next.
Alameda Unstakes SOL, Signals Ongoing Creditor Distributions
Alameda Research has transferred roughly $16 million worth of solana ( SOL) tokens after unstaking the assets, in a move that points to continued creditor repayments tied to the collapse of FTX.
Blockchain data tracked by Arkham Intelligence shows the tokens were sent to an address previously associated with distribution efforts. The transaction follows a similar pattern observed in recent months, where unstaked assets were routed to wallets linked to reimbursing creditors.
While there has been no official confirmation that the latest transfer will be distributed immediately, the repetition of this process suggests it forms part of a structured repayment strategy rather than a one-off movement.
Unstaking allows previously locked tokens in proof-of- stake networks to be withdrawn and made liquid. In this case, it enables Alameda to free up assets that can be redirected toward obligations stemming from FTX’s bankruptcy proceedings.
The latest transfer comes about a month after a comparable transaction, when Alameda moved a similar tranche of SOL to the same destination address. That earlier move reinforced expectations that such transfers are tied to ongoing creditor payouts.
Despite the asset sales, Alameda retains a substantial position in solana. The firm still holds approximately 3.5 million SOL, valued at around $294 million, according to Arkham data.
Solana remains one of the largest digital assets by market value, with a capitalization of about $47 billion. The token has traded near $82 in recent sessions, significantly below its peak of $293 reached early last year.
Alameda, founded in 2017 by Sam Bankman-Fried, was once a dominant trading firm in the crypto market. It played a central role in providing liquidity across exchanges and operated extensively in spot and derivatives markets.
Its fortunes shifted dramatically following the collapse of FTX in late 2022, which triggered a wave of insolvencies and legal proceedings. Since then, asset recovery and creditor repayment have been central to the restructuring process.
The steady movement of funds such as SOL highlights the scale and complexity of unwinding Alameda’s positions. Each transfer offers a signal, albeit indirect, of progress in returning value to creditors.
Hawaii Offers Case-by-Case Tax Relief After Kona Low Storms – Honolulu Today
Illinois Holocaust Museum honors Holocaust victims for Yom HaShoah
Fantasy Football Video: Will the Raiders reunite Fernando Mendoza with an Indiana WR in the 2026 NFL Draft?
Are tornadoes in Iowa possible today? Here’s what forecasters say
Kansas City murder suspect added to FBI’s Ten Most Wanted Fugitives list
Florida High School Football Rankings: Top 25 teams – Oct. 21
How old is Bo Nix? What to know about Oregon quarterback ahead of 2024 NFL Draft
Cleary's 21 help Le Moyne down Central Connecticut State 69-64 in OT
99th annual Pony Swim held in Virginia
Indiana Members Credit Union announced as new anchor tenant at Bottleworks District
Video: How Stephen Miller Is Adjusting Trump’s Immigration Agenda
Biden DOJ weaponized FACE Act against pro-life Americans, 882-report alleges
Mass drone warfare is Europe’s rising security threat
Man accused in Molotov cocktail attack of OpenAI CEO’s home charged with attempted murder
Embattled Rep Tony Gonzales announces plans to resign amid sexual misconduct allegations
-
Atlanta, GA1 week ago1 teenage girl killed, another injured in shooting at Piedmont Park, police say
-
Georgia1 week agoGeorgia House Special Runoff Election 2026 Live Results
-
Arkansas4 days agoArkansas TV meteorologist Melinda Mayo retires after nearly four decades on air
-
Pennsylvania1 week agoParents charged after toddler injured by wolf at Pennsylvania zoo
-
Milwaukee, WI1 week agoPotawatomi Casino Hotel evacuated after fire breaks out in rooftop HVAC system
-
Austin, TX7 days agoABC Kite Fest Returns to Austin for Annual Celebration – Austin Today
-
World1 week agoZelenskyy warns US-Iran war could divert critical aid from Ukraine
-
World1 week agoIndonesia receives bodies of peacekeepers killed in southern Lebanon