By Mohamed Ali - Technology & Digital Economy Commentary
May 15, 2026 - Start with a simple question. When a Nigerian moves their savings from naira to USDT to protect against inflation , who earns money from that decision?
Not the Nigerian. Not their bank. Not their government.
A private company called Tether earns it.
Understanding why requires understanding a concept that most people have never heard of, and one that African policymakers can no longer afford to ignore.
The Quiet Profit Built Into Every Currency#
Seigniorage is the profit a government earns simply by issuing money. The mechanics are straightforward: when a central bank prints a 1,000-naira note, it costs roughly 50 naira to produce.
The government keeps the remaining 950. That difference is seigniorage, quiet, automatic profit that flows from the simple fact that people use your currency.
According to the IMF, seigniorage revenue averages about 1.0 to 1.5 percent of GDP every year across Africa. For countries already struggling to fund hospitals, schools, and roads, that is real money. And here is the critical thing: when people stop using your currency, the seigniorage does not disappear. It moves.
Right now, it is moving from African governments to Tether.
How One Private Company Became the 18th Largest Holder of US Government Debt#
Tether is a private company registered in El Salvador. It issues a digital token called USDT, pegged one-to-one to the US dollar.
The business model is elegant in its simplicity. You send Tether one dollar. Tether gives you one USDT. Tether takes your dollar and buys a US Treasury bill. Treasury bills currently earn between 4 and 5 percent per year. Tether keeps all of that interest.
You hold the token. Tether holds the Treasury bill. Tether earns the yield.
In 2025, Tether reported $10 billion in net profit, from a single private company, in a single year. The company now has 500 million users globally, a large share of whom are in Africa, Asia, and Latin America: places where local currencies are losing value and people desperately need the dollar to protect their savings.
By the end of 2025, Tether held $141 billion in US Treasury bills, making it the 18th largest holder of US government debt in the world. To put that in perspective: Tether holds more US Treasuries than Germany, more than the United Arab Emirates, more than Australia.
A private company with no elected government behind it, no central bank mandate, and no sovereign accountability now outranks entire nations as a lender to the United States government.
Where did that $141 billion come from? From 500 million people switching out of their local currencies and into USDT. From Nigerians protecting their savings from naira devaluation. From Ethiopians hedging against birr volatility. From Somalians moving remittances outside the banking system.
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Every dollar that flows into USDT becomes a dollar that Tether uses to buy US Treasury bills. The interest on those bills is the seigniorage. And it flows from Africa to Tether to Washington.
The Center for Global Development said as much in 2025: part of the seigniorage revenue generated in sub-Saharan Africa is now flowing to the US Treasury, further eroding the tax base of countries already struggling to finance development.
This Was by Design#
This is not a coincidence or an unintended side effect of digital finance. In 2025, the United States passed the GENIUS Act, the first federal law creating a regulatory framework for stablecoins. The law requires that all stablecoins be backed by high-quality liquid assets. In practice, that means US Treasury bills.
US Treasury Secretary Scott Bessent stated publicly that stablecoins could drive at least $2 trillion in annual demand for US Treasury bills by 2030. What he did not mention is where that $2 trillion originates.
It comes from developing countries. From ordinary people across Nigeria, Ethiopia, Somalia, Ghana, and dozens of other nations, protecting their savings from inflation, and in doing so, inadvertently helping fund the US government's debt at cheaper rates.
The IMF has a name for what is happening: the privatisation of global seigniorage. A small number of private companies are now collecting a form of profit that, for centuries, belonged exclusively to sovereign governments.
Standard Chartered Bank warned in 2025 that stablecoins could pull $1 trillion in deposits out of emerging market banks within three years, $1 trillion that would no longer support local lending, local businesses, or local African economies.
Africa Is Not Without Options#
The seigniorage drain is a serious problem. But it is not an irreversible one, and some African countries are already responding.
Nigeria launched cNGN, a naira-backed stablecoin. The logic is direct: if Nigerians use cNGN instead of USDT, the seigniorage stays within Nigeria. The Central Bank of Nigeria earns the yield — not Tether. Rwanda is building a regulatory sandbox to attract fintech builders operating on African terms.
Kenya has passed legislation giving the Central Bank of Kenya direct oversight over stablecoin issuers operating in the country.
The clearest historical precedent is M-Pesa. When mobile money began reshaping financial access across East Africa, Safaricom did not simply watch foreign app companies absorb the revenue. Safaricom built something its users preferred over every foreign alternative, and it kept the value inside the region.
African central banks can follow the same logic. But they need to move at the same speed their citizens are already moving, because every day without a local digital alternative is another day of seigniorage flowing out of the continent.
Tether's balance sheet grows larger by the hour. The question African governments must now answer is not whether stablecoins will reshape monetary sovereignty, they already are. The question is whether Africa will build the infrastructure to keep that value at home, or continue watching it leave.