Circle’s USDC Overtakes Tether’s USDT in Onchain Activity as Regulation Drives Shift: JPMorgan

Circle Internet’s (CRCL) USDC overtook Tether’s USDT in onchain activity, Wall Street bank JPMorgan (JPM) said, as investors and institutions moved to adopt stablecoins that met emerging regulatory standards.

The bank noted that USDC’s market capitalization has surged 72% this year to $74 billion, outpacing USDT’s 32% rise. That reflects a shift toward assets with greater transparency and compliance, it said. USDT remains the largest stablecoin, with a market cap more the double the second-ranked USDC.

The Wednesday report attributed the divergence to regulatory clarity, particularly Europe’s Markets in Crypto-Assets (MiCA) framework, which took effect in mid-2024.

Stablecoins are cryptocurrencies whose value is tied to another asset, such as the U.S. dollar or gold. They play a major role in cryptocurrency markets, providing a payment infrastructure, and are also used to transfer money internationally.

USDT’s lack of MiCA authorization led to its removal from several European exchanges, while USDC’s regulatory compliance, transparent reserves and regular audits strengthened its appeal among institutional users, analysts led by Nikolaos Panigirtzoglou wrote.

USDC’s on-chain velocity also climbed, boosted by growth on Solana and Base, two blockchains driving decentralized finance (DeFi) activity, and by integration with payment giants Visa (V), Mastercard (MA) and Stripe, the analysts said.

Partnerships with e-commerce and Web3 platforms and Circle’s Cross-Chain Transfer Protocol have further enhanced its efficiency for payments and settlements.

While USDT remains dominant in emerging markets as the leading trading pair on exchanges, JPMorgan said USDC’s regulated model could set the global standard for future stablecoin development, challenging Tether’s long-standing lead.

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