USDC, Boston-based payments firm Circle’s flagship product, is currently seeing the most demand out of all regulated stablecoins, says crypto intelligence firm Kaiko.

In a new report, Kaiko says that following Circle’s announcement that its USDC and EURC products would now be compliant with European Markets in Crypto-assets Regulation (MiCA), both stablecoins have seen strong increases in volume.

While “non-compliant” stablecoins still rule the markets, Kaiko says that over the last year, regulated products have seen an increase in volume, possibly due to an appetite for transparency.

“Currently, non-compliant stablecoins dominate the market, accounting for 88% of the total stablecoin volume. MiCA could shift this balance as exchanges and market makers favor compliant stablecoins over non-compliant alternatives. Major crypto exchanges like Binance, Bitstamp, Kraken, and OKX have already implemented restrictions, delisting non-compliant stablecoins for their European customers.

On the other hand, 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.”

Kaiko also reports that another factor contributing to USDC’s growth is the fact that its usage for perpetual futures settlement is surging – though it is still minuscule compared to Tether’s USDT.

“Another factor contributing to this trend is the increased usage of USDC for perpetual futures settlement. The share of BTC perpetuals denominated in USDC, traded on Binance and Bybit, rose to 3.6% from 0.3% in January. 

USDC’s usage in ETH perpetuals trading was even higher, with ETH-USDC trade volume rising to over 6.8% from 1% at the beginning of the year. While USDC’s market share in these perpetual markets is just a fraction of USDT’s, its growing usage for perpetual settlement speaks to investors’ changing preferences as stablecoin regulations come into effect.”

Source : The Daily Hodl by Alex Richardson - Jul 10, 2024