Why are stablecoins so damn profitable and what does that mean to Africa?: By Nkahisang Ralepeli

Stablecoins quietly became one of the most profitable businesses in financial services. While banks juggle loan books, conformity and regulatory requirements, Stablecoin and Circle issuers run some of the weakest and most profitable operations in history. In 2024, Stablecoins processed over $ 27.6 trillion in transactions – which abandoned Visa and Mastercard with 7.7% – while maintaining the costs of the transaction near zero.

But what makes them so profitable? And why are they adopted so largely – especially in Africa, where stablecoins are increasingly used for payments, remittances and coating? Some factors determine this volume. Stablecoins activates instant transfers, with low costs, across borders, offering a convincing alternative to card networks and banks for moving money. Unlike traders’ taxes ~ 2-3% typical for Visa/Mastercard transactions. At the beginning of 2025, the total market capitalization of Stablecoins is around $ 200 billion (after reaching the maximum), increasing from only a few billion in 2018. The volumes of daily transactions usually exceed tens of billion dollars. The cases of use have extended beyond the transaction of cryptocurrencies – where Stablecoins initially won a position as a safe parking assets – in mainstream payments, remittances and even savings.

How Stablecoins Print money (literally)

Unlike banks, which earns money through loan and transactions, Stablecoin issuers have found a simpler – and wild profitable form:

They take over for customer funds – when you buy $ 100 worth USDT or USDC, the issuer holds $ 100 in reserve.
I invest it in the US Treasury-on the other hand, to allow this money to stay inactive, the stablecoin issuers invest it in short-term US government bonds, which currently produce about 5%.
These pocket of interest – users do not earn any yields; The issuer keeps it.
Of course, they also take some transaction fees, but mostly nominal amounts.

For the perspective, Tether held over $ 113 billion in US Treasury in 2024, earning about $ 1 billion per interest. This adds a profit of up to $ 13 billion in a single year – more than Goldman Sachs and with just a fraction of employees. Stablecoins manages massive volumes of transactions with negligible increment costs. Once the infrastructure is in force, moving a million dollars in addition to USDC costs in a circle – no branch visit, without manual processing, only blockchain transaction fees usually paid by the user. In some cases, issuers often do not even run their own blockchain (use existing ones such as ethereum, throne, solar), so that the maintenance cost of the network is outsourced by decentralized networks. It actually collects taxes in an extremely scalable model. Essentially, Stablecoin companies have reached a remarkably profitable formula: take over warehouses in dollars, park in safe investments that obtain interest, emit digital chips that users trading at their own cost and retains the very low general expenses.

By comparison, banks must borrow money in danger, keep capital pads and deal with high operational costs. Visa and Mastercard, despite 50%+ net margins, still require extensive fraud monitoring, conformity teams and a reduction of each transaction to remain profitable. Stablecoin issuers? They run ultra-lean, with a minimum and without loan defaults.

How Stablecoins eats in traditional finances

Stablecoins not only threaten the way we carry out financial serving in theory – it is already happening.

Cheaper transactions: visa traders and 2-3% mastercard per transaction; Stablecoins solves payments for fractions of a cent.
Global remittances: Moving money through Stablecoins costs much less than 8%+ taxes charged by some of the higher money transfer services.
Cross -border payments: Stablecoins allow companies to pay suppliers instantly, bypassing slow banking rails.

This is why even traditional financial giants are involved. Visa now accepts USDC settlements in his network, and JPMorgan has launched his own stablecoin (JPM Coin) for institutional payments.

Africa Stablecoin Surge: A Revolution of Payments

Stablecoins solves a very real problem in Africa: foreign instability and bank inefficiencies.

Nigeria: After Nairra devalued by 30%, stablecoin transactions increased while people sought refuge in tokens supported by USD.
Ethiopia: When Birr lost the value in 2023, the use of Stablecoin jumped 180% yoy.
Remittances: with 70% of African countries that face currency deficiencies, enterprises use Stablecoins to pay international suppliers instantly, according to a lancelization report.

Even in South Africa, where the financial system is more developed, Stablecoins earns traction for international transactions, commercial finances and coating against RAND volatility.

Governments take note. Nigeria recently launched CNGN, the first stablecoin, based on Naira, signaling that there are stable digital currencies here. Beyond owning only Stablecoins, Africans use them in their daily trade and business. Traders import goods by paying with stablecoins. The freelancers in Africa request payment in Stablecoins to avoid banking delays and conversion losses. In Ghana, if accessing American dollars can be difficult, some companies set cross -border invoices with stablecoins to accelerate transactions. A chain study study noted Stablecoins now represents 43% of the Crypto-Subsaharan Africa transaction, reflecting how fully they became for the region’s crypto economy.

Can this model take forever?

Of course, with high profits a great regulatory control comes. Regarding adoption, the sensitive regulation is largely positive. The clear legal status for Stablecoins will encourage more companies and financial institutions to use them. For example, if the South African regulatory authorities explicitly allow Stablecoins for cross-border trade (with proper reporting), several companies will adopt them for efficiency. Regulatory approval can also allow partnerships between Stablecoin and Banks/Fintech issuing, integrating Stablecoins into daily financial applications. I am especially a fan of system regulatory access to inform the reporting of real -time regulations, without the high costs we usually see now. In contrast, excessively harsh restrictions (such as a direct prohibition to use foreign stablecoins) could stifle adoption or push it on unofficial channels. Users could then face more risks or costs to access Stablecoins.

In Africa, the regulatory authorities are increasingly aware that Crypto is here to stay and work together to share the best practices. Here is a call for regulatory certainty on the continent to prevent regulatory arbitration and to ensure consumer protection. The competitive landscape now includes not only crypto -banking companies, but also public digital currencies (CBDC) towards private digital currencies (stablecoin). Traditional banks, in their turn, do not stand: many explore how to integrate blockchain or even launch their own stablecoins (for example, JPM of JPMorgan, although used internally, banks that see value in tokenized money). Visa and Mastercard themselves are partnership with Stablecoin companies to remain relevant – both have announced initiatives to help settle payments using Stablecoins on their networks.

Final thoughts

Stablecoins are no longer just a niche crypto experiment. It deals with more transactions than Visa and Mastercard, disrupts banking models and obtain profits at street level with Silicon Valley style.

The race is activated: Stablecoins proved why they are profitable and popular; Now, banks, Visa and Mastercard must adapt, and the regulatory authorities must ensure that this new financing balance maximizes the benefits for consumers, while protecting stability. The next few years will reveal whether Stablecoin companies can support their advantage in profitability and touch or if convergence with traditional finance models brings them back to the package.

The industry here to stay. The days when the industry were treated as the family cousin disappeared. Failure to comply with the action will have companies to catch an industry that does not expect anyone!