The market cap for Circle USDC stablecoin has surpassed $50 billion, continuing its rapid growth from last year. According to data from Defillama, USDC now has a circulating supply of $51 billion after seeing more than 11% growth in the past seven days.
The stablecoin’s massive growth this year only continues a positive trend for 2024 when it outperformed all its competitors, including Tether USDT, in market cap growth. Per Circle’s Shaping the Future of Money Report, USDC circulating supply grew by 78% year over year in 2024.
Despite this growth, USDC remains below its all-time high market cap of $55.9 billion from June 2022. However, the steady increase in its supply means it is back to challenging Tether USDT after the struggles of 2023.
USDC was one of the major victims of the banking collapse in 2023 when Circle faced challenges withdrawing some of USDC’s reserves from Silicon Valley Bank. The incident caused USDC to briefly depeg from the US dollar, leading to a massive sell-off by several holders who opted for USDT.
Interestingly, USDT also recorded around 50% growth in its market cap, going from $91.7 billion to $137.5 billion between 2023 and 2024. The leading stablecoin has seen its market cap grow by over 550% since 2020, while USDC has recorded more than 1,100% growth.
Tether troubles, regulatory clarity, and other factors driving USDC growth
Meanwhile, the resurgence of USDC has already led to a shrinking in USDT stablecoin dominance. According to Defillama, USDT currently dominates the market at 64.88%. While that is still substantial, it significantly dropped from the 70% dominance a few months ago.
Many factors have contributed to USDC’s growth over the past year, but regulatory clarity is a major driving force. With the US now having a pro-crypto president, Donald Trump, there is a strong sentiment that crypto will see some regulatory clarity, and stablecoins will most likely be one of the first subsectors to be regulated.
USDC, with its domicile in the US, appears to have some advantage over USDT on this front, with many preferring it for this reason. Its more regulatory-compliant feature has made it attractive in regions with stablecoin regulations.
For example, Circle became the stablecoin issuer to be licensed under the Markets in Crypto Assets (MiCA) regulation in the European Union. Tether USDT is facing the risk of exiting the European market due to its inability to comply with MiCA.
As for USDT, concerns about its regulatory compliance have only grown stronger in recent months, leading some of its major partners to consider possibly dropping it. For instance, Coinbase CEO Brian Armstrong has said that the exchange could delist USDT if the stablecoin law requires that.
The world’s largest crypto exchange, Binance, also partnered with Circle to increase the use cases of USDC on the exchange through more trading pairs and other promotions. Many stakeholders in the crypto market believe that the partnership was to challenge Tether’s hegemony.
Meanwhile, Tether has also faced renewed scrutiny over its reserves, with multiple accounts on X questioning whether it has enough backing for USDT. This has caused USDT circulating supply to decline slightly over the past month, leaving the stablecoin slightly off-peg.
Nevertheless, Both Tether and Circle continue to expand their products. Tether recently launched USDTO on Kraken’s Ink network and has been diversifying its services with a focus on commodities and AI. On its part, Circle also acquired Hashnote and USYC Tokenized Money Market Fund while partnering with trading firm DRW.
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