MiCA Shakes Up the Stablecoin Market as USDC and FDUSD Gain Ground on USDT

CryptoQuant on-chain data reveals a shifting landscape in the stablecoin market, with USDT facing increasing competition from USDC and FDUSD in a post-MiCA regulatory environment.

Collectively, stablecoins have seen a surge in demand, with both USDC and USDT experiencing significant growth in supply. However, USDC appears to be gaining an edge, thanks to the MiCA regulations that went into full effect across Europe on December 30, 2024.

Over the past month, USDC's supply surged by $954M, outpacing USDT's growth of $792M during the same period.

Meanwhile, FDUSD, a stablecoin pegged to the U.S. dollar and used primarily on Binance, is also enjoying rapid acceptance. It commands an impressive 48% of the trading volume in BTC pairs on the exchange.

This marks another trading sub-category where USDT has lost ground to another stablecoin, as it was previously responsible for a 42% share in BTC trading on Binance.

According to CryptoQuant analysts, the growth in FDUSD trading activity highlights the token's growing reputation as a stable, USD-pegged cryptocurrency.

Crypto-asset service providers must obtain MiCA authorization to operate within the EU. In this context, FDUSD and USDC appear to be benefitting the most from the new regulations.

On the other hand, the regulations have brought a storm for USDT, leading to its removal by exchanges operating within the EU region.

MiCA, short for Markets in Crypto-Assets, is a regulation supported by a comprehensive framework established by the European Union to regulate cryptocurrencies, including stablecoins, to ensure financial stability and consumer protection.

The European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) oversee compliance with MiCA.

Proposed in 2020, MiCA has been gradually implemented, with full compliance required by the end of 2024. MiCA aims to replace fragmented national regulations with a single EU-wide framework that will impact all stablecoin issuers operating in the European region.

In related news, Tether, the company behind the world's largest stablecoin by market capitalization, has announced its registration in El Salvador.

The announcement on Monday also mentioned that the company will migrate its operations from the British Virgin Islands to the crypto-friendly Central American country led by Nayib Bukele.

"Today, Tether announces its registration in El Salvador, and that it will be migrating its operations from the British Virgin Islands to El Salvador," the announcement stated.

Operating globally, USDT has a significant presence in various international markets and blockchains. However, it has often faced regulatory hurdles and criticism over the transparency of its reserves and financial audits.

In the United States alone, USDT has faced several legal challenges, including a high-profile case involving the New York Attorney General. In nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal nodal