Why Will USDC Volume Increase to $23 Billion by 2024?
Contributor
- USDC trading volume increased to $23 billion in 2024.
- Tightened regulatory hurdles increased the demand for regulated stablecoins.
The crypto market has seen increased regulation and scrutiny and altcoins such as Ripple [XRP], Uniswap [UNI], and Monero [XMR] are facing legal hurdles.
Conversely, increased regulation also increased the global demand for compliant stablecoins such as USD Coin [USDC].
In 2024, USDC trading volume increased to $23 billion from $9 billion in 2023. The exponential growth occurs due to the higher demand for legally accepted stablecoins among major traders, making regulated stablecoins a perfect alternative.
Source: X
Thus, recent developments have caused USDC’s market share to rise to a record high. According to Kaiko’s report, USDC’s market share was almost 14%.
What is driving USDC’s rise
Various market factors have driven USDC’s trading volume and market share. According to Kaiko, the rise of CEXes is a central factor driving USDC volume.
According to the report, USDC’s market share in CEXes experienced a sharper increase from 60% to 90% starting in March 2023.
Source: Kaiko report
Likewise, perpetual futures settlements have played a crucial role in the rise in trading volume. Kaiko reported that Bitcoin [BTC] perpetual futures in USDC rose from 0.3% to 3.6%, while Ethereum [ETH] perpetual futures rose to 6.8%.
MiCA: The Game Changer
On June 30, Circle reported its full compliance with MiCA (European Markets in Crypto-assets Regulation). This was a critical point in the European stablecoin market and served as a framework for others.
After Circle, other companies followed suit, including SocGen’s Forge, which primarily issues convertible bonds in euros.
From these companies’ compliance, a roadmap emerged that included requirements for other issuers such as publishing whitepapers, governance, reserve management, and supervisory standards.
After Circle announced its compliance with MiCA requirements, EURC and USDC recorded the highest trading volumes on the daily charts.
Likewise, SocGen saw an increase in trading volumes. The increase in trading volumes therefore showed that MiCA compliance played a crucial role in increasing demand for USDC.
Essentially, the existing regulatory framework allows institutional investors and other large players to follow while maintaining their requirements for derivatives markets.
The entry of institutional investors will play a crucial role in further increasing USDC demand and trading volumes.
Therefore, USDC and other regulated stablecoins will see a surge in trading volume as user preferences continue to change.
Although unregulated stablecoins still dominate, the future of regulated stablecoins looks bright as major exchange platforms such as Binance [BNB], OKX, Kraken and Bitstamp continue to restrict and delist them.
