USDC Overtakes USDT in On-Chain Activity Amid Regulatory Shift, JPMorgan Reports

Executive Summary

JPMorgan's analysis indicates that Circle's USDC has surpassed Tether's USDT in on-chain activity, a significant development in the stablecoin market. This shift is primarily driven by increasing demand for stablecoins that adhere to evolving regulatory standards, particularly Europe's Markets in Crypto-Assets (MiCA) framework. USDC's market capitalization has surged 72% this year to $74 billion, while USDT recorded a 32% growth in its market cap during the same period.

The Event in Detail

According to a report by JPMorgan, Circle's USDC has demonstrably overtaken Tether's USDT in terms of on-chain activity. This divergence is attributed to a growing preference for stablecoins offering regulatory clarity and compliance. USDC's market capitalization increased from $48 billion to $74 billion this year, representing a 72% expansion. In contrast, USDT's market capitalization grew 32%.

The regulatory landscape, particularly the implementation of Europe's MiCA framework in mid-2024, has been a pivotal factor. USDC's adherence to these regulations, coupled with its transparent reserves and regular audits, has enhanced its appeal to institutional investors. Conversely, USDT's lack of MiCA authorization has resulted in its delisting from multiple European exchanges. Crypto.com, for instance, announced it would cease support for Tether's USDT for European users by January 31, with a final conversion deadline of March 31. This follows Coinbase's prior delisting of USDT in Europe due to similar MiCA compliance requirements. In the United States, the Trump-backed GENIUS Act has also been cited as bolstering Circle's regulatory advantages, prioritizing U.S.-regulated stablecoin issuers.

Market Implications

This shift signifies a maturation of the stablecoin market, with regulatory compliance emerging as a critical differentiator for market leadership. The increased demand for MiCA-compliant stablecoins suggests a broader trend towards assets that can navigate stringent regulatory environments. While USDT's global supply surged from $89.1 billion in November 2023 to $180.9 billion by October 2025, leading to its market dominance falling from 70% to 59.9% over that period (with USDC rising from 20.5% to 25.3%), some data researchers, such as Filippo Armani from Dune, propose that this decline in dominance is primarily a mathematical consequence of USDT's overall supply growth rather than a direct reduction in global demand. Nevertheless, the regulatory pressures in specific regions like the EU clearly impact availability and adoption on major exchanges.

Expert Commentary

JPMorgan's findings underscore the increasing influence of regulatory frameworks on stablecoin market dynamics. Filippo Armani, a data researcher, has provided an alternative perspective, suggesting that while MiCA's stablecoin rules have prompted major platforms to restrict or delist USDT in Europe, the observed decline in USDT's market share may be mathematically correlated with its significant overall supply increase rather than a shrinking global demand.

Broader Context

The trajectory of USDC's growth relative to USDT highlights a pivotal moment for the Web3 ecosystem. The emphasis on regulatory adherence, transparency, and auditability is likely to become a prerequisite for broader institutional engagement and mainstream adoption of digital assets. This trend could accelerate the development and adoption of other compliant stablecoins globally, influencing future regulatory blueprints beyond Europe. The ongoing competition and strategic positioning of stablecoin issuers will likely continue to shape the financial infrastructure of the digital economy, with compliance playing an ever-more central role in market viability and growth.