EU regulations alter the balance between Circle USD (USDC) and Tether (USDT). The EU flag, USDC, and USDT logos are all visible.
The EU’s Markets in Crypto-Asset Regulation (MiCA) had a quick impact on the trading of products on centralized exchanges. In order to evade USDT and numerous other stablecoins, including DAI, exchanges that appeal to EU traders altered their product offerings.
Users account for over 17% of transactions in Europe, which is a relatively active market for crypto. Nevertheless, the presence of USDC in the US markets may also have an impact on the market, as Circle’s token is more heavily regulated.
The transition is subtle due to USDT’s long-standing dominance. The supply of USDT has remained constant over the past month, while the issuance of USDC has increased. The supply of USDT tokens remained at approximately 112 billion. Simultaneously, USDC experienced a 1.7B token increase over the previous two weeks.
Circle USD (USDC) is gaining ground as a fully regulated stablecoin, while USDT’s new mints have stalled due to EU regulations.
The utilization of the Base blockchain by Coinbase is also a contributing factor to the growth of USDC. The USDC supply is currently on Base, with over $2.9 billion flowing into its gaming, DEX, and DeFi ecosystem. Since September 2023, the Base blockchain has supported a native variant of the token in addition to bridged USDC.
USDC can also function as a fintech instrument for payments. The token will continue to be represented on Algorand, which was recently abandoned by Tether. USDC’s balance on Algorand increased by over 450% in June, following multiple mints.
Due to its substantial presence on the TRON blockchain, Tether’s USDT remains safeguarded. USDT is shifting to the TRON chain in excess of 50% of its supply. Ethereum continues to host a majority of tokens. Also, the transfer of approximately $5 billion in USDT into L2 scaling circuits is a result of bridging. Furthermore, USDT is providing native solutions to expand the Telegram ecosystem, with tokens issued in Q2 totaling nearly $600 million.
The futures-trading products of Tether have been the most significantly impacted by the changes. It is still feasible for ordinary users to store, exchange, and engage in spot trading with USDT. In the past 24 hours, USDT trading volumes have remained comparatively consistent, with a stabilization of approximately $53B. The USDC volumes began to increase at the end of June, reaching a peak of $10B in 24 hours. Typically, they average $5B in 24 hours.
Binance has initiated the process of transitioning to USDC. The Circle team also maintains that its asset is the sole stablecoin that has received regulatory sanction. Binance relaunched USDT products in USDC pairings, while tokens that were not MiCA compliant were exclusively available for spot trading.
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