USDC volume surges to $23B in 2024
The landscape of the cryptocurrency market has been significantly reshaped by tighter regulations and oversight, impacting alternative cryptocurrencies like Ripple, Uniswap, and Monero with various challenges.
On the flip side, this move towards stricter regulatory frameworks has catalyzed a surge in the worldwide appeal for regulation-compliant stablecoins, notably USD Coin.
By 2024, the trading activity of USDC skyrocketed to $23 billion, leaping from $9 billion in the preceding year. This remarkable growth is rooted in the escalating demand for stablecoins that comply with legal standards among leading traders, establishing regulated stablecoins as the ideal choice.
As a result of these shifts, USDC has seen its market presence expand to unprecedented levels. Insights from Kaiko's analysis reveal that USDC's share of the market approached a notable 14% in terms of FDUSD.
A mixture of industry dynamics has propelled USDC’s trading volumes and market penetration. Kaiko highlights the emergence of Centralized Exchanges (CEXes) as a pivotal driver behind USDC's transactional increases.
According to the study, from March 2023 onward, USDC witnessed its dominance in CEXes climb significantly, moving from 60% to 90%.
Another significant factor in this surge is the role of perpetual futures settlements. Reports by Kaiko indicated an ascendancy in Bitcoin perpetuals using USDC to 3.6% from just 0.3%, with Ethereum perpetuals reaching 6.8%.
This trend underlines a shifting attitude among investors towards stablecoins that meet regulatory standards.
Circle's announcement on June 30th of achieving full compliance with the MiCA (European Markets in Crypto-assets Regulation) stands as a landmark development in the realm of Europe's stablecoin sector, setting a benchmark for regulatory adherence.
Following Circle, entities like SocGen’s Forge, known for issuing EURO-based digital currencies, have aligned with the regulation.
Post-Circle’s announcement on meeting MiCA standards, both EURC and USDC observed a notable spike in their daily trading volumes.
Similarly, SocGen experienced an uptick in its trade volumes, underscoring the pivotal role of MiCA compliance in bolstering the demand for USDC.
This evolving regulatory landscape is guiding institutional investors and major market players towards a compliant approach to derivatives markets.
The entry of such institutional entities is set to further amplify the demand and trading volumes for USDC.
Accordingly, USDC alongside other regulated stablecoins are poised for continued growth in transaction activity as preferences among users evolve.
Despite the prevailing dominance of unregulated stablecoins, the trajectory for regulated alternatives appears optimistic, especially as leading exchanges like Binance, OKX, Kraken, and Bitstamp start to impose limitations and delist them.
