Circle’s USDC stablecoin has overtaken Tether (USDT) in on-chain transaction volume, mainly due to its stronger regulatory compliance. According to JPMorgan, this shift reflects how traders, exchanges, and institutions are prioritizing stablecoins that comply with the new rules established in 2024 and 2025.
New laws such as the EU’s MiCA and the draft GENIUS Act in the U.S. require full cash backing, monthly audits, and KYC/AML procedures for stablecoin issuers. Circle complies rigorously with these requirements, publishing audit reports every 30 days and connecting USDC to payment systems and blockchains like Solana and Base.
JPMorgan data show that the supply of USDC rose 72% in 2025 to roughly $74 billion, while Tether grew 32%, maintaining a higher total volume of about $150 billion. Historically, traders have questioned whether Tether holds sufficient cash backing, with several checks showing a limited financial cushion.
The implementation of MiCA, which bans coins without audits, has led European platforms to drop USDT, reducing its share of daily on-chain traffic. In addition, USDC is used in yield pools such as Aave, where it offers between 3.5% and 3.9% annually, becoming an attractive option for companies looking to manage their liquidity.
Implications for the financial market
This shift is transforming various aspects of the financial ecosystem. Institutions now prefer issuers that publish audits and keep cash visible, which directly influences the size of tokenized funds. Liquidity and routing are also affected, as blockchains like Solana or Base, which carry more USDC, allow faster and cheaper transfers.
In terms of risk and compliance, KYC/AML rules and qualified custody add security but exclude issuers who refuse to make their operations transparent. Competition is also evolving with new coins like USDe and USAT, diversifying the field and offering more options.
The next big test will be the possible approval of the GENIUS Act in the U.S. and watching which exchanges keep or delist each coin. For developers and compliance officers, the lesson is clear: demonstrate reserves, implement strict KYC/AML controls, and operate across all major blockchains is essential to remain in regulated markets.
