- The MiCA regulation has sparked a rising demand for compliant stablecoins, with Circle’s USDC standing out as a key player.
- The trends suggest a shift in market preference towards regulated digital assets, driven by European regulatory changes.
- A report from Kaiko, a French blockchain analytics firm, highlights this significant transition, underscoring USDC’s growing market share.
Discover how MiCA regulations are reshaping the stablecoin landscape, with Circle’s USDC taking a lead in the market.
Rising Demand for USDC Post-MiCA Implementation
The enactment of the Markets in Crypto-Assets Regulation (MiCA) on June 30 has created a palpable shift in the European stablecoin market. While currently, non-compliant stablecoins still account for a whopping 88% of the total stablecoin volume, this distribution is expected to tilt as market makers increasingly opt for compliant stablecoins. According to Kaiko’s recent findings, exchanges like Binance, Bitstamp, Kraken, and OKX are already transitioning, having delisted non-compliant stablecoins such as Tether’s USDT for their European customers.
USDC’s Market Share Surge
Kaiko’s data reveals an impressive surge in USDC trading volumes driven by regulatory pressures and demand for transparency. USDC’s trading volume swelled to $23 billion in 2024, up from $9 billion in 2023 and $5 billion in 2022. This phenomenal growth has pushed its market share closer to that of FDUSD, nearing 14%. Circle’s compliance efforts have further bolstered USDC’s market position. Recently, Circle obtained an e-money license from France’s Autorite de Controle Prudentiel et de Resolution (ACPR), securing full MiCA compliance and authorizing the issuance of USDC and Euro Coin (EURC) within the EU.
Centralized Exchanges Bolstering USDC’s Growth
Centralized exchanges (CEXs) have played a pivotal role in escalating USDC’s dominance. After Binance reinstated USDC in March 2023, the stablecoin’s CEX market share jumped significantly, from an average of 60% to over 90%. Bybit’s introduction of zero-fee USDC trading in February 2023 also attracted more traders, contributing to a substantial increase in volumes. The uptick in USDC’s usage for settling perpetual futures contracts, particularly Bitcoin and Ethereum, has been noteworthy. The percentage of Bitcoin perpetual contracts denominated in USDC on Binance and Bybit rose from 0.3% to 3.6%, while Ethereum perpetual volumes surged from 1% to over 6.8% during the same period.
Conclusion
The regulatory landscape in Europe, shaped by the MiCA regulation, is gradually shifting market dynamics in favor of compliant stablecoins. Circle’s USDC stands out as a major beneficiary of this transformation, buoyed by strategic compliance moves and significant adoption on centralized exchanges. These developments indicate a sustainable trend towards regulated digital assets, offering more security and transparency to market participants. As the crypto ecosystem evolves, USDC’s expanding footprint underscores the growing importance of regulatory compliance in fostering market confidence and growth.
