“In the euro-stablecoin market, the market share of MiCA-compliant euro stablecoins, including Circle's EURC and Société Générale's EURCV, reached an all-time high of 67% last week,” Kaiko research analysts said.
This shift has been largely driven by Coinbase, which the report said overtook Binance as the leading platform for euro-backed stablecoin trading in August. While Coinbase has embraced MiCA-compliant assets, Kaiko analysts said that Binance, “has been mainly promoting non-compliant euro stablecoins for non-European users through its zero-fee model.”
Steady trading volumes despite market shifts
Despite these changes, the report noted that weekly trading volumes for euro-backed stablecoins have remained relatively stable at around $30 million since MiCA's implementation in June, a marked decrease from the $100 million weekly volumes seen in March. Kaiko analysts attributed this shift in market share to exchange delistings rather than a surge in demand for euro-backed stablecoins.
“The drop in volumes suggests that the demand for euro stablecoins has not significantly increased despite regulatory changes, with the shift driven more by MiCA's forced delistings,” Kaiko analysts noted.
The report also said that the MiCA regulation will influence USD-backed stablecoins. Coinbase has announced plans to delist Tether's USDT and other non-compliant stablecoins for European users by December 30, 2024. Kaiko's report suggests that this could benefit MiCA-compliant USD stablecoins, particularly Circle's USDC, which, according to the report, “currently holds the largest share of MiCA-compliant USD-backed stablecoins and has already seen its market share rise from 10% to 12%.”
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MiCA's effects are being felt on decentralized exchanges (DEXs), which operate outside of the new regulatory framework, the Kaiko analysts said. As USDT remains the most liquid stablecoin in the market, its usage on DEXs was observed to have increased.
“Since DEXs are not governed by MiCA, traders may turn to these platforms for USDT trading to access liquidity,” Kaiko predicted.
This trend has been particularly notable on Uniswap, where USDT's presence has grown in contrast to USDC, whose dominance has waned since its sharp depeg following the collapse of Circle's banking partner, Silicon Valley Bank (SVB), the report stated.
The Kaiko data showed that USDC's market share on Uniswap has fallen from nearly 90% in 2022 to 55% as of last week.
MiCA's potential broader market impact
The landmark European Markets in Crypto-Assets regulation (MiCA) came into effect at the end of June, prompting a wave of stablecoin delistings and adjustments to product offerings across major exchanges.
In early October, Coinbase announced plans to delist USDT for its European users by the end of the year. The EU Parliament approved MiCA on April 20, 2023, and took effect 20 days later.
However, the deadline for implementing its legislative provisions is set for December 30, 2024. Notably, certain provisions, particularly those related to stablecoins, took effect earlier on June 30, 2024.