Regulatory Edge Propels USDC Past Tether in Stablecoin Growth Race

The market capitalization of USD stablecoins has surged to $303.5 billion, marking a 50% increase since the start of 2024, driven by robust demand for dollar-backed digital assets amid evolving regulatory frameworks and geopolitical shifts, according to LookonChain data. Tether's USDT and Circle's USDC remain the dominant players, with USDT holding $188.4 billion in market value and USDC trailing at $76.3 billion. However, USDC has outpaced its rival in recent months, expanding by 59% since the U.S. presidential election, compared to USDT's 32.5% growth, according to a Benzinga report.

The divergence in growth trajectories stems from the implementation of the Trump-backed GENIUS Act, which prioritizes U.S.-regulated stablecoin issuers like Circle over offshore competitors such as Tether. Introduced during the current administration, the policy has bolstered Circle's compliance edge, as USDC operates under stricter domestic oversight. This regulatory advantage has positioned Circle to capture a larger share of the liquidity race, with Protos data showing USDC's market cap rising from $48 billion to $76 billion since Trump's inauguration, as reported by Benzinga. Meanwhile, Tether, based in El Salvador, has announced plans to establish a U.S. subsidiary under former Trump adviser Bo Hines, signaling a strategic pivot to align with domestic regulations.

Circle's stock (CRCL) has faced short-term volatility, declining 2% to $133 on Wednesday, but analysts remain bullish on its long-term prospects. The company's partnership with Coinbase Global (NASDAQ: COIN) further strengthens its position, as both entities benefit from policy clarity and growing USDC adoption. Technical indicators suggest CRCL could break out of a descending channel if it surges above $140, potentially targeting the 200-day EMA at $154.80 and a projected $298 level, the Benzinga report said.

The GENIUS Act's broader implications extend beyond stablecoins, reshaping the competitive landscape between U.S. and offshore digital asset firms. By granting domestic issuers a structural edge, the policy aligns with Trump's broader pro-crypto agenda, including the recent approval of U.S.-based Bitcoin ETFs. This shift underscores the administration's commitment to fostering a regulatory environment that supports innovation while mitigating risks from unregulated offshore operations.

As the stablecoin market continues to expand, the interplay between regulatory policy and market dynamics will likely dictate the next phase of growth. For now, the 50% surge in USD stablecoin market cap highlights a sector poised for further evolution, with U.S. regulatory frameworks playing a pivotal role in shaping its trajectory.