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White-Label Stablecoin Wars: How Platforms Are Recapturing the $10B Margin Circle and Tether Keep

· 10 min read
Dora Noda
Dora Noda
Software Engineer

Tether made $10 billion in profit during the first three quarters of 2025. With fewer than 200 employees, that's over $65 million in gross profit per person—making it one of the most profitable companies per employee on Earth.

Circle isn't far behind. Despite sharing 50% of its reserve revenue with Coinbase, the USDC issuer generated $740 million in Q3 2025 alone, keeping 38% margins after distribution costs.

Now platforms are asking an obvious question: why are we sending this money to Circle and Tether?

Hyperliquid holds nearly $6 billion in USDC deposits—about 7.5% of all USDC in circulation. Until September 2025, every dollar of interest on those deposits flowed to Circle. Then Hyperliquid launched USDH, its own native stablecoin, with 50% of reserve yields flowing back to the protocol.

They're not alone. SoFi became the first U.S. national bank to issue a stablecoin on a public blockchain. Coinbase launched white-label stablecoin infrastructure. WSPN rolled out turnkey solutions letting enterprises deploy branded stablecoins in weeks. The great stablecoin margin recapture has begun.

The Economics: Why Platform Stablecoins Make Sense​

The stablecoin business model is remarkably simple and remarkably profitable.

Issuers collect dollars, invest them in short-term Treasuries and cash equivalents, and pocket the yield. There's no lending risk, no underwriting, no credit management. The entire issuance and redemption process is automated. Custody partners handle infrastructure. APIs handle the rest.

Tether's 2025 Performance:

  • $10 billion profit in first three quarters
  • $4.9 billion in Q2 alone
  • $157 billion USDT in circulation
  • Fewer than 200 employees
  • Profit margin: approximately 3.1% of circulating supply annually

Circle's 2025 Performance:

  • $740 million Q3 revenue (66% YoY growth)
  • $658 million Q2 reserve returns
  • 38% margin after distribution costs
  • $214 million net income in Q3 (202% YoY growth)
  • 50% revenue share paid to Coinbase

The disparity between Tether and Circle's profitability is striking. While USDT's market cap is only 213% larger than USDC's, Tether's profit was approximately 8,000% larger in 2024. Tether's diversified reserve strategy and minimal distribution costs allow for dramatically higher margins.

For platforms holding billions in stablecoin deposits, the math is simple: why let Circle or Tether keep 2-4% annually when you could capture it yourself?

The Hyperliquid Case Study: USDH and Native Stablecoin Economics​

Hyperliquid's launch of USDH in September 2025 demonstrates how the margin recapture works in practice.

The Problem​

Hyperliquid, one of crypto's largest decentralized perpetual exchanges, held nearly $6 billion in USDC deposits. With USDC representing over 90% of platform deposits, most interest earnings flowed to Circle rather than the Hyperliquid community.

At even a modest 4% yield on $6 billion, that's $240 million annually—money leaving the ecosystem.

The Solution​

Rather than building a stablecoin internally, Hyperliquid initiated a competitive bidding process. Native Markets, Paxos, Ethena, and others submitted proposals. A validator governance vote on September 14-15, 2025 selected the winner.

Native Markets—co-founded by Max Fiege (early Hyperliquid investor), Anish Agnihotri (blockchain researcher), and MC Lader (former Uniswap Labs COO)—won the bid with a compelling structure:

USDH Backing:

  • Cash and U.S. Treasury equivalents
  • Off-chain reserves via BlackRock
  • On-chain reserves via Superstate
  • Infrastructure managed through Stripe's Bridge platform

Revenue Model:

  • 50% to Hyperliquid Assistance Fund (HYPE buybacks)
  • 50% to ecosystem growth initiatives

Early Results​

USDH went live on September 24, 2025. Within 24 hours:

  • Over $15 million worth of USDH pre-minted
  • $2+ million in early trading volume
  • USDH/USDC pair held peg at 1.001

The launch represents a template other platforms are now studying: competitive selection, professional backing, and revenue sharing that keeps value within the ecosystem.

White-Label Infrastructure: Stablecoin Issuance in Weeks, Not Years​

The technical barriers to launching a stablecoin have collapsed.

WSPN's White-Label Solution​

WSPN (Worldwide Stablecoin Payment Network) rolled out its white-label stablecoin solution in December 2025, offering corporations, banks, and payment providers a production-ready stack. Key features:

  • Same infrastructure behind WSPN's WUSD stablecoin
  • Custom branded tokens with full governance control
  • 70-80% cheaper than in-house development
  • 10-20x faster deployment than building internally
  • Regulatory compliance frameworks included

Coinbase's Enterprise Play​

On December 18, 2025, Coinbase unveiled a service letting clients create custom-branded stablecoins. The structure:

  • USDC serves as collateral for client stablecoins
  • Coinbase leverages its Circle revenue-sharing agreement
  • Treasury yields pass through to partners
  • Enterprise-grade compliance and custody

This positions Coinbase as infrastructure provider rather than just USDC promoter—capturing fees from both sides of the stablecoin economy.

Bridge (Stripe) Open Issuance​

Stripe's subsidiary Bridge launched Open Issuance, enabling rapid stablecoin deployment across multiple blockchains. Sui launched USDsui using Bridge's platform—a U.S.-compliant stablecoin with multi-chain support.

As Bridge co-founder Zach Abrams noted: "Open Issuance eliminates the usual complexity and extended timelines associated with stablecoin deployment."

SoFi: The First Bank-Issued Public Blockchain Stablecoin​

SoFi Technologies made history in December 2025 by becoming the first U.S. national bank to issue a stablecoin on a public, permissionless blockchain.

SoFiUSD is:

  • Fully reserved in U.S. dollars
  • Issued by OCC-regulated SoFi Bank
  • Available for white-label licensing by other banks and fintechs
  • Interchangeable across SoFi's partner network

The regulatory advantage is significant. SoFi's OCC charter and Paxos's recent elevation to national charter status demonstrate that regulated entities can now participate directly in stablecoin issuance.

Protocol-Native Stablecoins: DeFi's Competitive Moat​

Beyond white-label solutions, DeFi protocols have been building their own stablecoins for years. The model is maturing.

GHO (Aave)​

Aave's GHO has exceeded 350 million tokens in circulation, showing steady growth over two years. Key characteristics:

  • Overcollateralized by Aave V3 deposits
  • Users mint directly into the money market
  • Borrow rate set by governance (not algorithmic)
  • Revenue flows to Aave DAO treasury

crvUSD (Curve Finance)​

Curve's stablecoin has minted over 230 million tokens, with wstETH alone accounting for about half of total minting. The technical innovation:

LLAMMA Mechanism: Curve's Liquidity-Linked Asset Management Mechanism enables soft liquidations through gradual collateral sales in Curve pools. During the October 2025 $19 billion crypto liquidation cascade, crvUSD experienced only a minor depeg to $1.02, which LLAMMA restored to equilibrium.

FRAX Ecosystem​

Frax currently issues three stablecoins—FRAX, FPI, and frxETH—with multiple integrated subprotocols. In the Hyperliquid USDH bidding, Frax proposed pegging USDH with frxUSD at a 1:1 ratio, backed by BlackRock's BUIDL on-chain treasury bond fund.

Benefits of Protocol-Native Stablecoins​

For DeFi protocols, native stablecoins offer:

  1. Additional revenue stream from reserve yields
  2. Governance token value accrual through buybacks
  3. Interest rate control for desired protocol outcomes
  4. External strategy deployment using stablecoin reserves
  5. Competitive moat against protocols relying on third-party stables

The risks include code complexity, potential user experience degradation, and liquidation events that could stress protocol balance sheets.

The Regulatory Catalyst: GENIUS Act Changes Everything​

The U.S. regulatory environment shifted dramatically in 2025.

The GENIUS Act, signed July 18, 2025, recognized stablecoins as formal payment instruments—equivalent to debit card networks, ACH transfers, and wire systems. Key provisions:

  • Structured framework for stablecoin licensing
  • Clear reserve requirements
  • Explicit exemption from securities classification for compliant stablecoins
  • Federal oversight with state-level flexibility

Full implementation rules are required by July 18, 2026, creating a one-year window where first movers can establish market position before regulatory frameworks fully crystallize.

State-Level Innovation​

North Dakota's Bank announced a partnership with Fiserv to issue Roughrider Coin—a sovereign stablecoin scheduled for 2026. The state-backed stablecoin will:

  • Service interbank transfers
  • Enable merchant payments
  • Support tokenized flows within the state
  • Interoperate with Fiserv's FIUSD infrastructure

This represents a new model: state-backed stablecoins using private infrastructure, potentially competing with both crypto-native issuers and traditional payment rails.

Market Dynamics: The $314 Billion Opportunity​

The stablecoin market has reached unprecedented scale.

2025 Market Statistics:

  • Total stablecoin supply: $314 billion (up $100 billion in 2025)
  • Annual transaction volume: $27+ trillion
  • Monthly active senders: 25.2 million
  • Share of on-chain crypto volume: 30%

Market Share:

  • Tether (USDT): 60.12% dominance
  • Circle (USDC): 29% (up 643 bps in 2025)
  • Others: 10.88%

Future Projections:

  • 5-10% of global cross-border payments by 2030
  • $2.1-4.2 trillion in cross-border value
  • $3-10 trillion total market by 2030 (various estimates)

Enterprise Adoption​

The adoption statistics are striking:

  • 49% of firms currently using stablecoins
  • 41% participating in pilot schemes
  • Goldman Sachs and Mastercard among 2025 adopters

This isn't crypto speculation—it's institutional infrastructure adoption.

The Wallet Layer: Where Real Competition Happens​

As stablecoin issuance becomes commoditized, differentiation is shifting to wallet infrastructure.

Enterprise-grade wallets are becoming critical infrastructure for CFOs prioritizing:

  • Auditability and compliance trails
  • Financial controls and approval workflows
  • Integration with existing treasury systems
  • Multi-stablecoin support and rebalancing

BVNK refined its platform throughout 2025, launching embedded wallets, adding U.S. payment rails, and expanding support for emerging blockchains. With payments in 130+ countries, they're positioning for the next phase: managing stablecoins, not just moving them.

The strategic implication: firms mastering wallet infrastructure and custody may capture efficiency gains that pure issuers miss.

What This Means for Different Players​

For DeFi Protocols​

The USDH model is replicable. Protocols with significant stablecoin deposits should evaluate:

  1. Current deposit volume and yield leakage
  2. Community appetite for native stablecoin governance
  3. Technical capacity for reserve management
  4. Regulatory exposure based on jurisdiction

Protocols capturing even partial yields can redirect significant resources to token buybacks, ecosystem grants, or reserve accumulation.

For TradFi Institutions​

The SoFi precedent opens a clear path. Banks with national charters can now:

  1. Issue stablecoins on public blockchains
  2. White-label infrastructure to fintech partners
  3. Capture interchange and yield economics
  4. Build competitive moats against crypto-native issuers

The regulatory arbitrage opportunity is time-limited—first movers establish brand recognition before 2026 implementation deadlines.

For Circle and Tether​

The competitive pressure is real but manageable.

Tether's advantages:

  • 60%+ market dominance
  • Minimal distribution costs
  • Established emerging market penetration
  • Diversified reserve strategy

Circle's advantages:

  • Regulatory positioning (U.S.-focused)
  • Institutional relationships
  • Revenue sharing creates aligned distribution partners
  • IPO positioning for 2025/2026

Both face the same dynamic: as platforms launch their own stablecoins, the addressable market for third-party issuers shrinks. The response will likely be more aggressive revenue sharing and infrastructure partnerships.

The 2026 Outlook​

Several developments will shape the white-label stablecoin landscape:

Q1-Q2 2026:

  • GENIUS Act implementation rules finalized
  • Additional bank-issued stablecoins launched
  • USDH adoption metrics reveal Hyperliquid model viability

Q3-Q4 2026:

  • State-level stablecoins (Roughrider Coin) launch
  • Major DeFi protocols announce native stablecoin plans
  • Enterprise wallet infrastructure consolidation

Key Metrics to Watch:

  • USDH market share on Hyperliquid (currently competing with USDC)
  • SoFiUSD white-label adoption by partner banks
  • Circle/Tether revenue impact from platform defection
  • Protocol-native stablecoin TVL growth rates

The Bottom Line​

The stablecoin margin wars have begun. Tether's $10 billion profit and Circle's 38% margins created an irresistible target for platforms holding billions in stablecoin deposits.

The infrastructure is ready. WSPN, Coinbase, Bridge, and SoFi offer turnkey solutions. Regulatory clarity from the GENIUS Act removes legal ambiguity. Protocol-native stablecoins from Aave, Curve, and Hyperliquid prove the model works.

For platforms evaluating native stablecoins, the question is no longer "if" but "how." The answers are emerging: competitive bidding (Hyperliquid), white-label infrastructure (WSPN/Coinbase), bank partnerships (SoFi), or protocol-native development (GHO/crvUSD).

The $314 billion stablecoin market is about to fragment. Circle and Tether will remain dominant, but their margin advantage—the core reason for their extraordinary profitability—is under direct assault. The platforms they enabled are becoming their competitors.

Welcome to the white-label stablecoin wars. The margin recapture has begun.

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