The introduction of the MiCA regulation has sparked a surge in demand for compliant stablecoins, with Circle’s USDC emerging as a key player in this space. According to a report by French blockchain analytics firm Kaiko, non-compliant stablecoins currently dominate the market, accounting for 88% of total stablecoin volume. However, with the implementation of MiCA on June 30, market dynamics are expected to shift towards favoring compliant stablecoins over non-compliant options.
In response to the regulatory changes, major crypto exchanges like Binance, Bitstamp, Kraken, and OKX have already begun delisting non-compliant stablecoins such as Tether’s USDT for their European customers. This move has paved the way for compliant stablecoins to gain momentum in the market, with USDC leading the charge as the preferred choice for traders seeking transparency and regulatory compliance.
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 the first global stablecoin issuer to achieve compliance with MiCA regulations in Europe. This approval ensures that both USDC and Euro Coin (EURC) tokens are now being issued in the EU in full compliance with the new regulatory framework.
Centralized exchanges (CEXs) have played a significant role in driving the growth of USDC volumes over the past year. Binance’s decision to relist USDC in March 2023 resulted in a substantial increase in the stablecoin’s market share on CEXs, soaring from an average of 60% to over 90% across all platforms. Additionally, Bybit’s introduction of zero-fee USDC trading in February 2023 further fueled the uptrend in USDC volumes.
The rise in USDC’s demand can be attributed to its increasing utilization in settling perpetual futures contracts. The proportion of Bitcoin perpetual futures denominated in USDC on major exchanges like Binance and Bybit has surged from 0.3% to 3.6% since January. Similarly, the trade volume of ETH-USDC pairs in Ethereum perpetual futures has witnessed a significant uptick, climbing from 1% to over 6.8% in the same period.
The regulatory landscape for stablecoins is evolving rapidly, with MiCA driving a fundamental shift towards compliant and transparent alternatives. With USDC leading the way as a favored choice among traders and exchanges alike, the demand for compliant stablecoins is poised to continue its upward trajectory in the foreseeable future. As market participants navigate the changing regulatory environment, the role of compliant stablecoins like USDC is set to become increasingly prominent in the digital asset ecosystem.
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