Key Insights:
- USDC transaction volume reached $2.2 trillion this year, while USDT recorded about $1.3 trillion.
- USDC supply rose to about $79.2 billion.
- The CLARITY Act passed the House, as Senate leaders say the bill may not advance before April.
Stablecoin activity has drawn renewed attention after new research showed a shift in transaction trends between the two largest dollar-pegged digital assets. Japanese investment bank Mizuho Financial Group reported that USD Coin (USDC), issued by Circle Internet Financial, has overtaken Tether (USDT) in transaction volume for the first time since 2019.
USDC Transaction Volume Overtakes USDT
In its research note, Mizuho reported that USDC currently accounts for around 64% of the combined transaction volume between USDC and USDT. According to the report, USDC had around $2.2 trillion in adjusted transaction volume as of the end of the year-to-date, and USDT had around $1.3 trillion. Analysts described the figure as a reversal of the trend that had previously placed USDT ahead in transaction usage over several years.
The analysis prompted the investment bank to revise its outlook for Circle’s publicly traded shares. Mizuho raised its price target for Circle stock from $100 to $120 following a comparison of transaction volume. Circle’s stock price showed little immediate movement following the release of the research note.
USDT continues to hold the largest stablecoin market capitalization, estimated at approximately $184 billion. By comparison, USDC’s market capitalization is about $79 billion. Mizuho analysts stated that transaction activity may represent an important indicator of stablecoin adoption.
According to the report, the stablecoin that becomes the most widely used for everyday transfers could eventually shape how digital dollars function in payment networks, regardless of which token currently holds the largest market capitalization.
Legislative Uncertainty Around Digital Asset Regulation
The developments in the stablecoin market are occurring alongside ongoing policy discussions in Washington, DC, concerning digital asset regulation. In the United States, lawmakers are still discussing a market structure proposal to oversee digital assets. The bill, which is the CLARITY Act, had already passed the United States House of Representatives.
However, John Thune reported that the Senate is planning to pass another bill that requires voting first. According to those reports, the chamber does not expect the digital asset market structure legislation to advance before April.
The timeline for congressional agreement remains uncertain as policymakers continue negotiations over regulatory frameworks for digital asset markets.
USDC Market Capitalization Approaches Record High
At the same time that USDC transaction activity has increased, the stablecoin’s market capitalization has approached a new record level. According to CoinMarketCap data, the circulating supply of USDC has already reached $79.2 billion.
The figure represents a new all-time high for the dollar-pegged stablecoin. Previously, USDC’s market capitalization peaked slightly below $79 billion in December of the previous year.
Recent growth in the circulating supply has occurred over a relatively short period. Data shows that the stablecoin’s market capitalization stood slightly above $70 billion in early February. The figure then increased to around $75 billion earlier this month before rising to its current level.
Analyst Links USDC Demand to Dubai Market Developments
An analyst based in Dubai linked the recent expansion of USDC supply to developments in regional financial markets. Dubai-based analyst Rami Al-Hashimi stated that demand for the stablecoin has increased significantly in recent weeks.
In a post on X, Al-Hashimi said over-the-counter trading desks in Dubai have struggled to meet demand for USDC from investors seeking to move funds out of traditional markets.
According to AL-Hashimi, the increased demand coincided with changes in the real estate sector in the United Arab Emirates. Al-Hashimi said property prices in Dubai have declined by roughly 27% this month.
He described the situation as prompting investors to shift capital into digital assets. In the post, the analyst wrote that the environment reflects “war panic” and “capital flight,” describing what he characterized as a rapid shift in investor behavior.
The analyst also cited market data that referenced the DFM Real Estate Index. According to the data, the index declined from around 16,800 at its recent peak to roughly 11,516, representing a drop of about 31%. Al-Hashimi also stated that some property sellers have begun accepting cryptocurrency payments directly. According to his post, some listings now offer price discounts to buyers willing to pay in Bitcoin.
