JPMorgan says Circle's USDC stablecoin outpaces Tether's USDT in onchain growth

Circle's USDC stablecoin is growing faster than Tether's USDT in onchain activity and market capitalization, driven by clearer regulatory frameworks and rising institutional adoption, according to JPMorgan analysts.

USDC's market cap has climbed from about $43 billion in January to around $74 billion today — a 72% increase that significantly outpaces USDT's 32% growth during the same period, the analysts led by managing director Nikolaos Panigirtzoglou said in a report Wednesday. The divergence reflects a broader market shift toward stablecoins that prioritize transparency, compliance, and regulatory assurance, according to the analysts.

"USDC's transparent reserve management and regular audits make it more trustworthy among institutional investors and other regulated entities," the analysts 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."

The analysts noted that the MiCA regulation, which came into effect in July 2024, accelerated the divergence in stablecoin velocity — or the volume of onchain transfers relative to market capitalization — between USDC and USDT.

"Since then, USDC's velocity and onchain activity have been trending up, getting an additional boost last summer from the Genius Act in the U.S.," they said.

USDT, which has not received MiCA authorization, faced delistings from major exchanges following the regulation's rollout, while USDC gained momentum from integrations with Visa, Mastercard, Stripe, and other payment networks that enable onchain settlements and merchant payments, the analysts said.

USDC's growth has also benefited from its presence on blockchains such as Solana and Base, which have seen an uptick in decentralized finance activity. Circle's Cross-Chain Transfer Protocol (CCTP) further supports this by allowing USDC to move securely between blockchains without relying on custodial bridges, according to the analysts.

Outside the U.S., however, Tether's USDT continues to dominate as the primary trading pair in emerging markets and maintains higher trading velocity on centralized exchanges.

"USDT's higher ratio implies greater utilization for exchange trading outside the U.S. However, USDT's current dominance in exchange trading outside the U.S. could come under threat if USDC's model sets the standard for future stablecoin development and adoption globally," the analysts said.

Tether plans to launch USAT, a stablecoin designed to be fully compliant with the recently enacted Genius Act in the U.S., by the end of this year. Last month, the JPMorgan analysts said the planned launch of the USAT stablecoin, Hyperliquid's USDH, and other fintech-issued stablecoins will intensify competition for Circle. Still, the analysts noted the emerging competition is likely to be a "zero-sum game," with U.S. issuers mainly trading market share unless the overall crypto market expands significantly.