The impact of the Fed's rate cut policy on the cryptocurrency industry, especially the stablecoin market, is gradually emerging. According to the latest report from CCData, for every 50 basis point rate cut by the Fed, the five major stablecoin issuers will collectively lose about $625 million in annualized interest income.
Among these issuers, Tether holds about $93.2 billion in U.S. Treasuries and repurchase agreements, making it the most affected stablecoin issuer. In the first half of 2024, Tether contributed $5.2 billion in net profit through these assets. As the Fed continues to cut interest rates, the profits of Tether and other issuers (such as USDC, FDUSD, PYUSD, TUSD) may shrink significantly, especially since about 80.2% of their reserves are invested in U.S. Treasuries.
This means that while the market value and demand for stablecoins are still growing, rate cuts will directly reduce the interest income sources of issuers and affect their overall profitability. For investors and the industry, this will be an important dynamic that needs to be closely monitored, and stablecoin issuers may need to adjust their investment strategies to cope with the challenges brought about by rate cuts.
