Circle’s USDC Dominates Regulated Stablecoin Market

USDC, Circle’s premier product, has become the most sought-after regulated stablecoin, according to crypto intelligence firm Kaiko. Following Circle’s announcement that USDC and EURC would comply with the European Markets in Crypto-assets Regulation (MiCA), trading volumes for these stablecoins have surged.

Despite non-compliant stablecoins still leading the market, regulated alternatives like USDC are gaining traction. Kaiko’s report suggests that increasing demand for transparency and compliance might be driving this shift.

“Currently, non-compliant stablecoins dominate the market, accounting for 88% of the total stablecoin volume. MiCA could shift this balance as exchanges and market makers favor compliant stablecoins over non-compliant alternatives,” Kaiko states. Major exchanges such as Binance, Bitstamp, Kraken, and OKX have already restricted non-compliant stablecoins for their European users, further boosting the appeal of regulated options.

Impact of Perpetual Futures Settlement

Another factor contributing to USDC’s growth is its rising use in perpetual futures settlements. Although still small compared to Tether’s USDT, USDC’s presence in this area is expanding. Kaiko reports that the share of BTC perpetuals denominated in USDC on Binance and Bybit increased from 0.3% in January to 3.6%.

The trend is even more pronounced in ETH perpetuals trading. USDC’s volume in ETH-USDC trades rose from 1% at the start of the year to over 6.8%. While USDC’s market share remains a fraction of USDT’s, its growing use in perpetual settlements indicates shifting investor preferences as stablecoin regulations tighten.

Kaiko’s report underscores the significance of regulatory compliance in the stablecoin market. As regulations like MiCA come into play, the demand for transparent and regulated stablecoins like USDC is likely to increase, reshaping the market landscape.