The MiCA regulation has sparked a surge in the demand for compliant stablecoins, with Circle’s USDC emerging as a front runner in this trend. According to a recent report by French blockchain analytics firm Kaiko, non-compliant stablecoins currently make up a whopping 88% of the total stablecoin volume. However, the implementation of Europe’s Markets in Crypto-Assets Regulation (MiCA) on June 30 is expected to shift this dynamic, as market makers are expected to favor compliant stablecoins over their non-compliant counterparts.
In response to the MiCA regulation, several prominent cryptocurrency exchanges such as Binance, Bitstamp, Kraken, and OKX have started restricting and delisting non-compliant stablecoins, including Tether’s USDT, for their European customers. This move has paved the way for compliant stablecoins to gain significant traction in the market. Kaiko’s data shows that the share of compliant stablecoins has been steadily increasing over the past year, with USDC leading the pack as the preferred choice among investors.
USDC has experienced a substantial surge in trading volume, reaching $23 billion in 2024, up from $9 billion in 2023 and $5 billion in 2022. This growth has propelled USDC’s market share to an all-time high, approaching FDUSD’s 14%. Circle, the fintech firm behind USDC, was recently granted an e-money license by France’s Autorite de Controle Prudentiel et de Resolution (ACPR), making it the first global stablecoin issuer to achieve compliance with the new regulatory framework in Europe. This approval has paved the way for USDC and Euro Coin (EURC) tokens to be issued in the EU in full compliance with MiCA.
Centralized exchanges (CEXs) have played a crucial role in driving up USDC volumes over the past year. Binance’s decision to relist USDC in March 2023 led to a significant jump in the stablecoin’s market share on CEX, increasing from an average of 60% to over 90% across all exchanges. Additionally, Bybit’s introduction of zero-fee USDC trading in February 2023 further boosted USDC volumes. The growing demand for USDC can be attributed to its increasing use in settling perpetual futures contracts, with the proportion of Bitcoin perpetual denominated in USDC on Binance and Bybit rising from 0.3% to 3.6% since January. Similarly, the volume of ETH-USDC trades for Ethereum perpetual futures has surged from 1% to over 6.8% in the same period.
The rise of compliant stablecoins, with USDC at the forefront, reflects a growing appetite for transparent and regulated alternatives in the cryptocurrency market. As regulatory frameworks continue to evolve, compliant stablecoins are likely to become the preferred choice among investors and market participants seeking a secure and compliant trading environment.
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