Forget Bitcoin. Tether may be the most profitable coin in crypto.

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How do you make $6 billion a year in crypto? Bitcoin trading might work, but it’s risky. A better way: act like a bank. Take people’s money, put it in reserves like treasury bills, and sit back while the money earns 5%.

The company playing the bank is Tether Holdings, issuer of the largest and most widely used stablecoin on the market. Stablecoins are like crypto money; they typically hold a price of $1, backed 1 to 1 by reserves. Tether is now king, dominating the market with $83 billion in deposits.

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While rising rates have largely depressed Bitcoin and crypto, they have made Tether perhaps the most profitable digital asset in the world. Its parent company says its excess reserves hit a record high of $2.44 billion in the first quarter, including net profit of $1.48 billion. Tether says most of its reserves are made up of US Treasuries, whose yields have jumped to around 5%. The company does not explore the source of its profits and the price of its assets could fall, thus denting its profits. At its latest pace, however, Tether could bring in nearly $6 billion this year.

The profits make it a financial giant, not just in crypto. The company could earn more than BlackRock (ticker: BLK) this year, and is expected to report net income of $5.5 billion. If it were a bank, its deposits would exceed those of Comerica (CMA). And Tether Holdings is expected to be significantly more profitable than Coinbase Global (COIN), the crypto exchange that has racked up billions of dollars in losses and is expected to post a loss of $564 million in 2023.

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