Stablecoin growth in the U.S. market has stalled as regulatory delays have concentrated activity on non-U.S. exchanges, reflecting challenges to the country’s leadership in the digital asset space.
Through 2023, US-regulated exchanges saw a steady increase in stablecoin trading due to the increasing global adoption of digital currencies. However, in 2024, this trend reversed, with more stablecoin activity occurring on non-US exchanges. Experts believe that this change does not indicate a sharp decline in US market participants, but rather a rapid increase in the use of stablecoins outside the US.
Emerging markets drive stablecoin adoption as US risks losing global influence
The surge in global stablecoin adoption is particularly evident in emerging markets where local currencies are facing volatility. These regions are increasingly turning to stablecoins like USDC and Tether to preserve value and provide fast, low-cost transactions. In contrast, U.S. regulated platforms are growing at a slower pace, reflecting missed opportunities due to a lack of clear regulatory guidance.
According to Circle, the publisher of USDC, there is strong global demand for stablecoins backed by the US dollar, especially in regions where access to stable currencies is limited. “One way to think about the near-term opportunity for USDC is to look at global demand for fiat dollar cash,” a Circle spokesperson explained.
“The Federal Reserve estimates that nearly $1 trillion in U.S. banknotes, or 45% of all paper money in circulation, is stored outside the United States, and two-thirds of all $100 bills are in circulation overseas. “This demand exists despite the difficulties people outside the United States face when trying to obtain US dollars through their local banking system,” a Circle spokesperson said. The company highlighted the benefits that stablecoins bring to those seeking an alternative to traditional banking.
The decline in US stablecoin growth is not just about lost profits. It also affects the influence of the United States in the global financial landscape. Historically, the US dollar has played a dominant role in global commerce, but if stablecoin markets continue to grow overseas, that leadership could be lost. This situation mirrors the rise of the Eurodollar, which initially grew with little attention from U.S. lawmakers but later helped solidify the dollar’s role in international markets.
Europe advances with clear regulations, US struggles to catch up
In contrast, Europe has made significant progress with the Cryptoassets Market Regulation (MiCA), which started coming into force in June 2024. MiCA provides clear legal and regulatory guidelines for stablecoins and other digital assets. This framework has led to more stablecoin activity in the region, putting the United States at a disadvantage.
Mr. Circle warned that the United States risks being left behind if it does not introduce clear regulations soon. “The lack of a U.S. regulatory framework for dollar-referenced stablecoins represents a threat to U.S. interests,” the company noted.
However, Circle remains optimistic about the future of USDC in the US market. The spokesperson concluded: “The US is the home of the dollar and we are bullish on USDC’s potential here.”
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Gairika holds a position in BTC. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu Cryptocurrency Project. Readers are encouraged to conduct their own research and consult a qualified financial advisor before making any investment decisions.
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