The recent implementation of Europe’s Markets in Crypto-Assets Regulation (MiCA) has resulted in a significant shift in the stablecoin market landscape. One of the primary beneficiaries of this regulatory change is Circle’s USDC, which has emerged as a leading compliant stablecoin in the region.
The Impact of MiCA Regulation
With the enforcement of MiCA on June 30, the demand for compliant stablecoins has surged, with market makers now showing a preference for regulated alternatives over non-compliant options. According to the latest report by French blockchain analytics firm Kaiko, non-compliant stablecoins currently dominate 88% of the total stablecoin volume. However, the tide is expected to turn in favor of compliant stablecoins with the rise of MiCA.
Several prominent cryptocurrency exchanges, including Binance, Bitstamp, Kraken, and OKX, have already started imposing restrictions and delisting non-compliant stablecoins like Tether’s USDT for their European customers. This trend has led to a sharp increase in the demand for compliant stablecoins, particularly USDC, which has seen a significant rise in trading volume over the past year.
USDC’s Remarkable Growth
Kaiko’s estimates reveal that USDC experienced a substantial increase in weekly trading volume, reaching $23 billion in 2024, compared to $9 billion in 2023 and $5 billion in 2022. This growth has propelled USDC’s market share to an all-time high, closely rivaling FDUSD’s 14%. The approval of Circle’s e-money license by France’s Autorite de Controle Prudentiel et de Resolution (ACPR) has further boosted USDC’s credibility and compliance with MiCA.
Role of Centralized Exchanges
Centralized exchanges (CEXs) have played a crucial role in driving up USDC volumes, especially after Binance’s decision to re-list the stablecoin in March 2023. USDC’s market share on CEXs has soared from 60% to over 90% across all exchanges. Additionally, Bybit’s introduction of zero-fee USDC trading has also contributed to the increased trading volumes.
The rising demand for USDC can be attributed to its growing use in settling perpetual futures contracts. The proportion of Bitcoin perpetual denominated in USDC on platforms like Binance and Bybit has seen a significant increase, from 0.3% to 3.6% since January. Similarly, the trade volume of ETH-USDC pairs for Ethereum perpetual contracts has surged from 1% to over 6.8% during the same period.
The implementation of MiCA has sparked a paradigm shift in the stablecoin market, with compliant alternatives like USDC gaining momentum and market share. As regulatory pressures continue to shape the crypto industry, the trend towards transparency and compliance is expected to drive further adoption of regulated stablecoins in Europe and beyond.
