USDC Overtakes USDT in Europe Stablecoin Trading

Circle's USDC has surpassed Tether's USDT in euro-denominated stablecoin trading, reflecting the growing influence of European Union cryptocurrency regulations on market activity.

According to a recent report from cryptocurrency market data provider Kaiko, USDC now represents 56% of stablecoin trading volume against the euro, compared with just 10% in January 2024. The shift has accelerated as cryptocurrency exchanges adjust their services to comply with the EU's Markets in Crypto-Assets Regulation (MiCA), which has led several major platforms to restrict USDT trading for customers in the European Economic Area (EEA).

USDC gains market share in European stablecoin trading

Kaiko's research indicates that USDC has established a leading position in euro-denominated stablecoin markets, overtaking USDT in both trading volume and available liquidity. USDC's euro trading order books are now approximately 40% deeper than those of USDT, suggesting that traders can access greater liquidity when exchanging euros for Circle's stablecoin.

This development represents a notable change in European cryptocurrency markets, where USDT previously held a much stronger position. Kaiko described stablecoin-to-euro trading pairs as a “main on-ramp and off-ramp for European customers,” highlighting their importance in facilitating transactions between traditional currencies and digital assets. These trading pairs allow European investors to convert euros into US dollar-pegged stablecoins when entering cryptocurrency markets and exchange them back when withdrawing funds.

Despite USDC's growing dominance in European euro trading, Tether remains the largest stablecoin globally. USDT's circulating supply is still approximately 2.5 times larger than that of USDC, demonstrating that the shift in European trading activity has not translated into a similar change in worldwide stablecoin market leadership.

MiCA regulations strengthen USDC's position in Europe

The changes in European stablecoin trading have coincided with the implementation of MiCA, which establishes regulatory requirements for cryptocurrency businesses and stablecoin issuers operating across the European Union. Several major cryptocurrency exchanges have restricted USDT availability for EEA customers as part of their compliance efforts, contributing to increased activity in alternative stablecoins.

Circle has pursued regulatory authorization within the EU, positioning USDC to benefit from the region's evolving compliance requirements. Approximately two weeks before Kaiko's report, the European Banking Authority (EBA) designated USDC as the EU's first “significant e-money token” under MiCA. The classification places USDC under direct EBA supervision and introduces additional regulatory obligations for its issuer.

The designation also reflects the growing importance of regulated stablecoins within Europe's digital asset ecosystem, particularly as financial institutions and cryptocurrency exchanges adapt to stricter operating requirements.

US stablecoin regulations could reshape competition between Circle and Tether

Kaiko suggested that similar developments could emerge in the United States as the country implements its own stablecoin regulatory framework under the GENIUS Act. On Oct. 21, the Office of the Comptroller of the Currency (OCC) issued its first final rule under the legislation, establishing reserve management and redemption requirements for stablecoin issuers under its supervision. The new requirements are scheduled to take effect on Jan. 18, 2027.

Additional restrictions are expected to apply from July 2028, when US platforms will face limitations on offering stablecoins issued by companies that do not satisfy the law's approval requirements. These changes could influence which stablecoins are available on American cryptocurrency exchanges, potentially affecting trading volumes and market liquidity.

Circle's efforts to obtain regulatory authorization in both Europe and the United States may strengthen USDC's competitive position as compliance becomes increasingly important. Tether, meanwhile, has adopted a different strategy by introducing USAT, a separate stablecoin developed specifically for the US market.

The contrasting approaches highlight how regulatory requirements are increasingly shaping competition among major stablecoin issuers. While USDT continues to lead the global market by circulating supply, USDC's growing share of euro-denominated trading demonstrates how regional regulations can significantly influence stablecoin adoption, liquidity and trading preferences.

Sources:

https://cointelegraph.com/news/usdc-overtakes-usdt-euro-stablecoin-trading-mica-kaiko

https://www.cointribune.com/en/crypto-usdc-overtakes-usdt-in-the-european-market/