In July, Circle's USD Coin (USDC) experienced a notable increase in trading volume, driven by more market funds and new European digital asset regulations.
The overall stablecoin market grew by 2.11% in July, reaching a total capitalization of $164 billion. This marks the tenth consecutive month of growth for major stablecoins, which now hold a 6.93% share of the market.
Tether (USDT), the largest stablecoin, saw its market cap rise by 1.61% to $116 billion, hitting a new record high. This is the eleventh straight month of growth for Tether, which now commands nearly 70% of the stablecoin market.
While some stablecoins like USDC, BlackRock’s BUIDL, and PayPal USD (PYUSD) saw gains, others like First Digital USD (FDUSD) and Ethena USDe declined in market value. Among the top ten stablecoins, PayPal USD was the biggest gainer, increasing by 17.9% to $589 million, also reaching a new record high. USDC now holds 73.5% of the market share (excluding Tether) among the top ten stablecoins.
USDC trading volumes on centralized exchanges jumped 48.1% to $135 billion, largely due to its compliance with the new European Markets in Crypto-Assets (MiCA) regulation, which recently took effect.
Overall stablecoin trading volumes declined by 8.35% to $795 billion in July, reflecting lower activity on centralized exchanges. However, there is a trend towards higher monthly volumes thanks to new Ethereum ETFs and positive sentiment from the Bitcoin 2024 Conference.
The new MiCA regulations have raised concerns about Tether's future in Europe, contributing to reduced trading activity on centralized exchanges. These regulations require stablecoin issuers to be based in the EU, notify authorities, and submit a white paper for approval. Larger stablecoins also face stricter rules, such as limits on daily transactions and requirements to hold 60% of reserves in cash deposits across multiple banks.
Circle’s USD Coin (USDC) and EUR Coin (EURC) have already met these new regulations, boosting confidence and trading activity. The MiCA regulations have significantly reshaped the stablecoin market in Europe, making compliance crucial for continued growth.
