The market capitalization of USDC has risen by 72%, far exceeding USDT, with JPMorgan warning: Tether's European market is under threat.

According to a report by JPMorgan analysts, Circle's USDC stablecoin is significantly outperforming Tether's USDT in terms of on-chain activity and market capitalization growth. Since January of this year, the market capitalization of USDC has surged from approximately $43 billion to about $74 billion, an increase of 72%, far exceeding USDT's 32% growth during the same period. Analysts believe that this divergence is primarily due to USDC's clearer regulatory framework and increasing institutional adoption, while USDT faces resistance from delisting and authorization issues brought about by the European MiCA regulations.

Strong Rise Momentum for USDC: Institutional Trust and Regulatory Compliance Become Key

JPMorgan's analyst team pointed out that the strong rise of USDC reflects the market's shift towards stablecoins that emphasize transparency, compliance, and regulatory assurance.

• Data comparison disparity: As of today, USDC market capitalization has risen by 72%, while USDT has only risen by 32%.
• Institutional Preference: Analysts emphasize that “USDC's transparent reserve management and regular audits make it more credible among institutional investors and regulated entities.”
• MiCA Boosts the European Market: USDC complies with the European crypto-assets market regulation (MiCA) framework, which distinguishes it from competitors and makes it the preferred stablecoin for financial institutions. MiCA regulation came into effect in July 2024, accelerating the differentiation in on-chain circulation speed between USDC and USDT.

USDT faces regulatory challenges in Europe, while USDC holds an advantage with integration.

The implementation of MiCA regulation poses a significant challenge to unauthorized USDT, resulting in its delisting from major exchanges. In contrast, USDC benefits from deep integration with traditional finance and emerging public chains.

• Delisting Risk: USDT was delisted from major exchanges due to lack of MiCA authorization after the regulation was introduced.
• Payment Network Integration: USDC has gained momentum through integration with payment networks such as Visa, Mastercard, and Stripe, enabling on-chain settlement and merchant payments.
• Layer 1 Expansion: The rise of USDC is also attributed to its increased activity on public chains such as Solana and Base, which have seen significant growth in decentralized finance (DeFi) activities. Additionally, Circle's Cross-Chain Transfer Protocol (CCTP) further ensures that USDC can be securely transferred between blockchains without relying on custodial bridges.

New Competition and Global Market Landscape: Tether's Counterattack and Zero-Sum Game

Although USDC has an advantage in the institutional and compliant markets, USDT still maintains a dominant position in emerging markets and exchange trading.

• Dominance in Emerging Markets: In non-US markets, Tether's USDT remains the primary trading pair and maintains a high trading velocity on mainstream CEX. Analysts believe that the high ratio of USDT suggests its high utilization in exchange trading outside the US.
• Future Threats: However, analysts warn that if the pattern of USDC sets the future standards for stablecoin development globally, the dominance of USDT in trading on non-U.S. exchanges may be threatened.
• Increased Competition: Tether plans to launch a fully compliant stablecoin USAT with the U.S. Genius Act by the end of this year. JPMorgan analysts believe that USAT, Hyperliquid's USDH, and other stablecoins issued by fintech companies will intensify competition against Circle; however, this could be a “zero-sum game” unless the overall crypto market expands significantly.

Conclusion

USDC market capitalization growth has significantly outpaced USDT, clearly indicating that the cryptocurrency market, especially institutional investors, is shifting towards regulated and highly transparent stablecoins. The European MiCA regulation has become a key catalyst accelerating this trend, and USDC's advantages in payments and Layer 1 integration have further solidified its position. Although USDT still holds a place in emerging markets, the USDC model is becoming the standard for future stablecoin development and institutional adoption, signaling that compliant stablecoins will play an increasingly important role in the global financial system.