Increasing Demand for USDC in Compliance with MiCA
Recently, the MiCA regulation has sparked a surge in the demand for compliant stablecoins, with Circle’s USDC emerging as a primary beneficiary of this trend. USDC is currently leading the demand for regulated stablecoins, as highlighted by French blockchain analytics firm Kaiko.
- Kaiko’s latest report indicates that non-compliant stablecoins represent 88% of the total stablecoin volume.
- The implementation of MiCA in Europe is expected to shift this dynamic, with market makers showing a preference for compliant stablecoins over non-compliant options.
- Prominent crypto exchanges like Binance, Bitstamp, Kraken, and OKX have already taken steps to restrict and delist non-compliant stablecoins for their European clientele.
Growth of USDC Fueled by Centralized Exchanges
Centralized exchanges, or CEXs, have played a crucial role in driving the increasing volumes of USDC over the past year. For instance:
- Following Binance’s decision to relist USDC in March 2023, the stablecoin’s market share on CEXs surged from an average of 60% to over 90% across all platforms.
- Bybit’s introduction of zero-fee USDC trading in February 2023 also contributed to the uptick in volumes.
- The demand for USDC has been further boosted by its use in settling perpetual futures contracts, with the proportion of Bitcoin perpetual denominated in USDC on Binance and Bybit experiencing significant growth.
USDC’s Market Share and Regulatory Compliance
As per Kaiko’s estimates, the trading volume of USDC has seen a substantial increase, 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 near FDUSD’s 14%.
- Circle, the fintech company behind USDC, recently obtained an e-money license from France’s Autorite de Controle Prudentiel et de Resolution (ACPR), making it compliant with stablecoin provisions under MiCA.
- This approval signifies that both USDC and Euro Coin (EURC) tokens are now being issued in the EU in adherence to MiCA.
Impacts of MiCA on the Stablecoin Market
The implementation of MiCA has had several notable impacts on the stablecoin market, including:
- A shift towards compliant stablecoins in response to regulatory requirements.
- A growing preference for transparent and regulated alternatives, benefiting stablecoins like USDC.
- Increased trading volumes and market share for USDC, driven by the regulatory compliance and support from centralized exchanges.
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