The MiCA regulation has set in motion a shift towards compliant stablecoins in the cryptocurrency market. With the implementation of MiCA on June 30, market makers are now favoring regulated stablecoins over non-compliant alternatives. According to a report by French blockchain analytics firm Kaiko, non-compliant stablecoins currently make up 88% of the total stablecoin volume. This indicates a clear demand for transparent and regulated alternatives in the market.
Among the regulated stablecoins, Circle’s USDC has emerged as a primary beneficiary of the trend. Kaiko’s report revealed that USDC is leading the demand for compliant stablecoins, experiencing a significant increase in trading volume over the past year. In 2024, USDC’s weekly trading volume reached $23 billion, up from $9 billion in 2023 and $5 billion in 2022. This growth has pushed USDC’s market share to an all-time high, approaching FDUSD’s 14%.
Circle, the fintech firm behind USDC, recently obtained an e-money license from France’s Autorite de Controle Prudentiel et de Resolution (ACPR). This approval signifies that both USDC and Euro Coin (EURC) tokens are now being issued in the EU in full compliance with MiCA. Circle has become the first global stablecoin issuer to achieve compliance with the new regulatory framework in Europe, solidifying its position in the market.
Centralized exchanges (CEXs) have played a significant role in boosting USDC volumes over the past year. Following Binance’s decision to re-list USDC in March 2023, the stablecoin’s market share on CEXs jumped from an average of 60% to over 90% across all exchanges. Bybit’s introduction of zero-fee USDC trading in February 2023 also contributed to increased volumes. The rise in USDC’s demand can largely be attributed to its growing use in settling perpetual futures contracts.
The proportion of Bitcoin perpetual contracts denominated in USDC on exchanges like Binance and Bybit has seen a significant increase. Since January, the proportion has grown from 0.3% to 3.6%. Similarly, for Ethereum perpetual contracts, the rise in ETH-USDC trade volume has been even more substantial, growing from 1% to over 6.8% in the same period. This indicates a growing acceptance and adoption of USDC in futures trading within the cryptocurrency market.
The MiCA regulation has reshaped the stablecoin landscape, with compliant stablecoins like USDC gaining traction in the market. Circle’s compliance with the regulatory framework and the support of centralized exchanges have propelled USDC to the forefront of the industry. As the demand for transparent and regulated alternatives continues to grow, USDC is well-positioned to maintain its dominance in the evolving cryptocurrency market.