USDC Leads Demand For Regulated Stablecoins With $23 Billion Trading Volume

A Kaiko report indicates that the weekly trading volume for Circle's USDC stablecoin has surged in 2024. This more than doubles the $9 billion recorded last year and nearly five times the $5 billion seen in 2022.

The trading volume for the USDC stablecoin has soared to $23 billion a year, driven largely by demand for transparency and traders’ preference for regulated stablecoin alternatives.

This growth comes amid a backdrop of increasing regulatory scrutiny on the crypto market. Stablecoins, in particular, have come under the scanner due to their role in facilitating crypto trades and their potential impact on financial stability.

In response to this growing demand for stablecoin regulation, the European Union implemented the first part of its Markets in Crypto-Assets (MiCA) framework on June 30. This framework aims to harmonize crypto regulation across the EU and includes provisions for the supervision and authorization of stablecoin issuers.

According to a Kaiko report, the weekly trading volume for USDC surged in 2024, reaching an average of $23 billion a year. This marks a significant increase compared to the $9 billion recorded last year and nearly five times the $5 billion seen in 2022.

The report also highlights that USDC's market share has grown substantially, narrowing the gap with the reserve-backed stablecoin First Digital USD (FDUSD), which boasts a 14% market share. The report adds that centralized exchanges (CEX) continue to dominate the market for stablecoin trading.

Interestingly, the report also notes that USDC and its Euro-denominated counterpart, EURC, both witnessed their strongest daily trading volume since June 30, when the first part of the MiCA framework went into effect in the European Union.

Another notable observation is that SocGen’s Euro CoinVertible (EURCV) stablecoin also saw significant volume, although not as much as the EURC, given it is only available on Bitstamp exchange.

These volume upticks, coupled with the role of CEXes in driving the interest, suggest a growing preference for compliant stablecoins over their non-compliant counterparts, which currently dominate the market with 88% of total stablecoin volume. However, this trend could shift in favor of compliant stablecoins as MiCA fully rolls out.

“The share of compliant stablecoins has increased over the past year, suggesting increased demand for transparency and regulated alternatives. So far, this trend has mostly benefited USDC,” an excerpt in the Kaiko Research read.