In July, the total stablecoin market capitalization showed a 2.11% increase, reaching a total of $164 billion. This growth signifies a ten-month consecutive rise for major stablecoins, with their market dominance expanding to 6.93%. Tether, the largest stablecoin in terms of market cap, experienced a 1.61% increase, reaching $116 billion and setting a new all-time high. DefiLlama reported that Tether (USDT) currently holds close to 70% of the stablecoin market share. Despite the overall growth in the stablecoin market, some stablecoins such as First Digital USD (FDUSD) and Ethena USDe witnessed a decline in market capitalization.
Among the top ten stablecoins, PayPal USD emerged as the leader with a 17.9% increase, reaching $589 million and achieving a new record high. USDC, on the other hand, now represents 73.5% of the market share among the top ten stablecoins (excluding Tether). Trading volumes for USDC pairs on centralized exchanges surged by 48.1% to $135 billion, benefiting from compliance with the Markets in Crypto-Assets (MiCA) regulation that came into effect in Europe last month. Overall, stablecoin trading volumes experienced an 8.35% decrease to $795 billion in July, in part due to subdued activity on centralized exchanges.
The recent adoption of MiCA regulations has raised concerns about the future of Tether (USDT) in Europe and contributed to a decline in stablecoin trading on centralized exchanges. The new regulations require stablecoin issuers, including asset-referenced tokens (ARTs) and e-money tokens (EMTs), to be based in the European Union, notify relevant authorities, and submit a white paper for approval. Additionally, larger stablecoins are subjected to stricter regulations, such as a cap on daily transactions and the mandate for 60% of reserves to be held in cash deposits across multiple banks for increased stability and security in the market. Despite these challenges, stablecoins like Circle’s USD Coin (USDC) and EUR Coin (EURC) have already complied with the regulations, leading to enhanced confidence and trading activity.
The introduction of MiCA regulations has undoubtedly reshaped the stablecoin market in Europe, with compliance emerging as a critical factor for sustained market participation and growth. The regulatory changes have prompted market players to reassess their strategies and ensure adherence to the new requirements to maintain their market presence. As the stablecoin market continues to evolve, staying abreast of regulatory developments and adapting to the changing landscape will be essential for stablecoin issuers and market participants alike.
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