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Stablecoin Market Expansion in July
In July, the total market capitalization of stablecoins experienced a growth of 2.11%, reaching an impressive $164 billion, as reported by CCData. This growth marks the tenth consecutive month of increase for prominent stablecoins, with their market share climbing to 6.93%.
Tether Achieves Record High
Tether, the leading stablecoin by market capitalization, witnessed a 1.61% rise, bringing its total to $116 billion, which is a new all-time high. This achievement signifies Tether’s eleventh straight month of growth in market value. According to DefiLlama, Tether (USDT) commands nearly 70% of the stablecoin market, and the company reported an impressive profit of $5.2 billion for the first half of 2024 as of July 31.
Performance of Other Stablecoins
Other significant stablecoins, including USD Coin (USDC), BlackRock’s BUIDL, and PayPal USD (PYUSD), also experienced gains, while First Digital USD (FDUSD) and Ethena USDe faced declines in their market capitalization.
PayPal USD’s Noteworthy Surge
Among the top ten stablecoins, PayPal USD stood out as the highest performer, increasing by 17.9% to $589 million, achieving a new all-time high. In contrast, USDC now holds a market share of 73.5% (excluding Tether) within the top ten stablecoins ranked by market capitalization.
Trading Volume Insights
The report indicates that trading volumes for USDC pairs on centralized exchanges surged by 48.1% to $135 billion, benefiting from the stablecoin’s alignment with the Markets in Crypto-Assets (MiCA) regulation that took effect in Europe last month. However, overall stablecoin trading volumes fell by 8.35% to $795 billion in July due to a decline in activity on centralized exchanges. Notably, the report suggests a positive trend towards increased monthly volumes following the introduction of spot Ethereum ETFs and the optimistic sentiment expressed at the Bitcoin 2024 Conference last week.
Impact of MiCA Regulations
CCData’s report emphasizes the implications of the newly introduced MiCA regulations, which have raised questions about Tether’s (USDT) future in Europe and have contributed to a downturn in trading activity for stablecoins on centralized exchanges. According to these regulations, stablecoin issuers, including asset-referenced tokens (ARTs) and e-money tokens (EMTs), are required to operate from within the European Union, notify relevant authorities, and submit a white paper for approval.
Furthermore, larger stablecoins are subject to more stringent regulations, such as limits on daily transactions and a requirement that 60% of their reserves be maintained in cash deposits across multiple banks, ensuring enhanced stability and security in the marketplace. Stablecoins like Circle’s USD Coin (USDC) and EUR Coin (EURC) have already met these regulatory requirements, leading to a boost in confidence and trading activity.
The establishment of MiCA regulations has significantly transformed the stablecoin environment in Europe, making compliance a crucial element for ongoing market involvement and future growth.
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