USD Coin (USDC) has dramatically increased its share of euro-paired stablecoin trading to 56% as of October, up from 10% in December 2023, according to market data. The surge reflects broader regulatory changes reshaping Europe's cryptocurrency infrastructure.
The Markets in Crypto-Assets (MiCA) regulation, which established a July 2026 deadline for stablecoin authorization, has been the primary driver of this shift. Tether (USDT), which was denied access to euro markets under these rules, saw its market position erode in the region despite maintaining a global supply 2.5 times larger than USDC.
Regulatory Impact on Liquidity
USDC's euro-paired order books now have 40% more depth than USDT/EUR order books, enabling larger trades with less price movement. Circle, the company behind USDC, obtained authorization through a French electronic-money license and was designated a significant e-money token by the European Banking Authority in mid-October.
Coinbase began restricting USDT trading for European customers and planned to convert non-compliant USDT holdings to compliant alternatives around October 30. Julia Kovalchuk, Head of B2B Product at Paybis, a MiCA-licensed infrastructure provider, noted that among payment-firm clients, USDC grew from approximately 21% to 75% of stablecoin volume within a year following MiCA's implementation.
Layer 2 Growth and Ethereum Ecosystem
The Ethereum stablecoin ecosystem expanded to over 300 million holder addresses, with approximately three-quarters of these addresses residing on layer two networks. Lower transaction fees on layer two networks have made stablecoin transfers more accessible to users.
Growth metrics on layer two networks present a mixed picture, however. While some volume reflects increased payment activity, some represents trading balances moving between networks and exchanges rather than sustained adoption for payments, merchant settlement, and payroll use cases.
Concentration Risks and Future Competition
The consolidation around a smaller number of regulated issuers raises concentration concerns. Euro-paired stablecoin trade volume reached approximately $10 billion per month by late 2024 before declining in subsequent months.
Kovalchuk emphasized that regulatory frameworks like MiCA matter because holders carry the risk when stablecoin issuers face restrictions. She advised businesses to examine how many stablecoins their platforms support and how quickly they can transition if one is restricted.
The competitive landscape between USDC and USDT will likely depend on regulatory access, liquidity depth, and sustained user activity across different regions and use cases.
