USDC Surges Past USDT in Euro Stablecoin Trading Amid EU Rule Changes

USDC Surges in Euro Stablecoin Trading Amidst Regulatory Shifts

Circle’s USD Coin (USDC) has surpassed Tether’s USDt (USDT) in stablecoin trading against the euro, a significant shift attributed to evolving European Union regulations that increasingly favor stablecoins compliant with bloc-wide rules.

According to a recent report by crypto analytics firm Kaiko, USDC now commands 56% of stablecoin trading volume against the euro. This represents a dramatic increase from just 10% in January 2024. The surge in USDC’s dominance accelerated after major cryptocurrency exchanges began restricting USDT trading for customers within the European Economic Area, a move prompted by the EU’s Markets in Crypto-Assets Regulation (MiCA).

Beyond trading volume, USDC has also outpaced USDT in euro-denominated trading liquidity. Kaiko data indicates that USDC’s order books are now approximately 40% deeper than those of its rival. Despite this shift in the European market, Tether remains the larger stablecoin globally, boasting a circulating supply roughly 2.5 times that of USDC.

Kaiko highlighted the importance of stablecoin-to-euro trading pairs, describing them as a “main on-ramp and off-ramp for European customers.” These pairs facilitate the exchange of euros for US dollar-pegged stablecoins, enabling seamless entry into and exit from cryptocurrency markets for European users.

Regulatory Tailwinds Boost USDC

The findings coincide with a significant regulatory development for USDC. Just two weeks prior, the European Banking Authority (EBA) designated USDC as the EU’s first “significant e-money token” under MiCA. This classification subjects Circle’s stablecoin to direct EBA supervision and imposes additional regulatory requirements on its issuer.

Meanwhile, the United States is also moving towards a more defined stablecoin regulatory framework. Kaiko suggests that the US approach, influenced by legislation like the GENIUS Act, could mirror the trading activity shifts observed in Europe.

The Office of the Comptroller of the Currency (OCC) issued its first final rule under the GENIUS Act on October 21st, establishing reserve and redemption requirements for stablecoin issuers under its purview, effective January 18, 2027. Furthermore, beginning in July 2028, US platforms will face restrictions on offering stablecoins from issuers that do not meet the law’s approval criteria.

These impending regulatory changes appear to benefit Circle, which has actively pursued authorization in both Europe and the United States. Tether, in contrast, has adopted a different strategy, launching a separate US-focused stablecoin, USAT.