USDC trading volume surges crossing $23 Billion reflecting a growing demand for transparency as traders increasingly favor regulated stablecoin options. This significant growth coincides with the implementation of the MiCA framework.
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USDC Trading Volume surges crossing $23 Billion
A recent Kaiko report highlights the dramatic increase in USDC’s weekly trading volume in 2024, which has more than doubled from $9 billion last year and is nearly five times the $5 billion recorded in 2022.
https://research.kaiko.com/insights/usdc-leads-demand-for-regulated-stablecoins
This surge has positioned USDC to challenge the 14% market share held by the reserve-backed stablecoin, First Digital USD (FDUSD). The report also indicates that centralized exchanges (CEX) account for most of these volumes, surpassing decentralized exchanges (DEX).
The report further notes that USDC and its Euro-denominated counterpart, EURC, have seen substantial daily trading volumes since June 30, when the first phase of the MiCA framework was implemented in the European Union. SocGen’s Euro CoinVertible (EURCV) stablecoin also experienced significant volume, although it lagged behind EURC due to its availability being limited to the Bitstamp exchange.
Influential role of CEXes
This notable volume increase and the influential role of CEXes suggest a growing interest in compliant stablecoins compared to their non-compliant counterparts, which currently dominate 88% of the total stablecoin market volume. The Kaiko report suggests that MiCA could potentially shift this balance in favor of compliant stablecoins.
“The share of compliant stablecoins has increased over the past year, indicating a heightened demand for transparency and regulated alternatives. This trend has primarily benefited USDC,” stated an excerpt from the Kaiko Research report.
MiCA Framework
The MiCA framework has introduced comprehensive guidelines for stablecoin issuers, including the publication of whitepapers, governance requirements, reserves management, and prudential standards. It was implemented in Europe on June 30, and represents a significant development in the stablecoin market.
Following its implementation, Circle secured an Electronic Money Institution (EMI) license on July 1, a crucial requirement for issuing dollar- and euro-pegged crypto tokens in the EU. This license enables Circle to offer its EURC stablecoin to customers within the European bloc.
MiCA compliance is significantly boosting USDC’s popularity. This regulatory endorsement enhances the stablecoin’s appeal for perpetual futures settlement, as noted by Kaiko Research. Institutional investors, who must adhere to compliance standards when participating in derivatives markets, are likely to favor such regulated stablecoin options.
“While USDC’s market share in perpetual markets is still a fraction of USDT’s, its increasing use for perpetual settlement reflects changing investor preferences as stablecoin regulations take effect,” the report added.
Conclusion
To conclude, USDC trading volume surges crossing $23 Billion and growing market share highlight a clear shift towards transparency and regulation in the stablecoin market. As the MiCA framework continues to take effect, compliant stablecoins like USDC are well-positioned to thrive, reflecting evolving investor preferences for secure and regulated digital assets.
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