USDC Surges Ahead of Tether as Regulatory Clarity and Institutional Adoption Drive Growth

Circle’s USDC stablecoin is outpacing Tether’s USDT in both on-chain activity and market capitalisation, according to JPMorgan analysts, reflecting a growing preference for transparency and regulatory compliance in the stablecoin sector.

USDC’s market cap has risen from approximately $43 billion in January to around $74 billion today — a 72% increase that significantly surpasses USDT’s 32% growth over the same period, the analysts led by managing director Nikolaos Panigirtzoglou noted in a report released Wednesday. The divergence, they say, signals a broader shift in the market toward stablecoins prioritising regulatory assurance and institutional trust.

> “USDC's transparent reserve management and regular audits make it more trustworthy among institutional investors and other regulated entities,” the report said. > > “Additionally, its compliance with frameworks like the Markets in Crypto-Assets (MiCA) regulation in Europe sets it apart from competitors, making USDC the preferred stablecoin for financial institutions.”

MiCA, which came into force in July 2024, has accelerated the gap in stablecoin velocity — the volume of on-chain transfers relative to market capitalisation — between USDC and USDT. “Since then, USDC's velocity and on-chain activity have been trending up, gaining an additional boost last summer from the Genius Act in the U.S.,” the analysts added.

In contrast, USDT, which has not received MiCA authorisation, faced delistings from major exchanges following the regulation’s rollout. Meanwhile, USDC benefited from integrations with Visa, Mastercard, Stripe and other payment networks, enabling on-chain settlements and merchant payments.

Circle’s growth has also been supported by its presence on blockchains such as Solana and Base, which have seen increased activity in decentralised finance. The company’s Cross-Chain Transfer Protocol (CCTP) allows USDC to move securely between blockchains without relying on custodial bridges, providing additional utility, the analysts noted.

Outside the U.S., Tether’s USDT remains the dominant stablecoin in emerging markets, maintaining higher trading velocity on centralised exchanges. “USDT's higher ratio implies greater utilisation for exchange trading outside the U.S. However, USDT's current dominance could come under threat if USDC's model sets the standard for future stablecoin development and adoption globally,” the analysts said.

Tether is preparing to launch USAT, a fully U.S.-compliant stablecoin under the Genius Act, by the end of this year. JPMorgan analysts previously noted that USAT, Hyperliquid’s USDH, and other fintech-issued stablecoins will intensify competition for Circle, though the emerging rivalry is expected to be largely a “zero-sum game,” with U.S. issuers primarily competing for market share unless the broader crypto market grows substantially.