The European crypto regulation MiCA is no longer just a set of new obligations for exchanges and service providers. It’s starting to change what investors actually trade with. A new academic study shows that on platforms more exposed to European rules, the importance of the stablecoin USDT is declining and part of trading is shifting to the regulation-compliant USDC. Overall market activity hasn’t dramatically decreased—the regulation has primarily redirected trading between individual tokens.
The European Markets in Crypto-Assets regulation, known by the acronym MiCA, was meant to bring clearer rules and higher client protection standards to the crypto market. Until recently, however, much of the debate revolved primarily around licenses, administrative requirements, and which companies would be able to continue operating in the European Union.
Now, the first data is beginning to emerge showing that the regulation is indeed also affecting the structure of the market itself. Economists Nicola Borri from LUISS University and Kirill Shakhnov from the University of Surrey examined in a new study Does Regulation Bite at Gateways? Evidence from MiCA and Stablecoins what happened after European rules led some crypto platforms to remove trading pairs with USDT for clients from the European Economic Area, while USDC gained corresponding regulatory status.
The result is remarkable. Overall market shares and aggregate trading volumes haven’t fundamentally changed. However, on exchanges where European rules had the strongest effect, activity has visibly shifted from USDT toward USDC.
Article Contents – MiCA:
- MiCA Divided the Two Largest Dollar Stablecoins
- Traders Didn't Disappear. Part of the Activity Shifted to USDC
- USDT Nevertheless Remains Much Larger Globally
- Regulation can itself influence winners and losers
- What changed in the Czech Republic from July 1
- Does MiCA mean that USDC is safer than USDT?
- MiCA shows its true power
MiCA Divided the Two Largest Dollar Stablecoins
Tether’s USDT and USDC issued by Circle have a very similar function at first glance. Both stablecoins aim to maintain a price close to one US dollar and in the crypto environment serve, among other things, as a means for moving capital between individual digital assets.
Investors use them, for example, when they want to exit a more volatile cryptocurrency but don’t want to immediately convert funds back to traditional currency. Stablecoins are also an important source of liquidity on crypto exchanges.
From a European regulatory perspective, however, a significant difference has emerged between USDC and USDT. Circle obtained an electronic money institution license from the French regulator ACPR through its French entity and from July 2024 began issuing USDC and EURC in the European Union in compliance with MiCA requirements. The company at the time declared itself the first global stablecoin issuer complying with MiCA requirements. Additionally, Circle’s French company has held a crypto-asset service provider license since April 2026.
For tokens that don’t comply with MiCA requirements, the situation evolved in the opposite direction. The European regulator ESMA in January 2025 asked national supervisory authorities to ensure that crypto service providers bring their services relating to non-compliant stablecoins into compliance with MiCA no later than the end of the first quarter of 2025. ESMA’s guidelines concerned so-called ART and EMT tokens that didn’t meet MiCA rules.
It was precisely this difference that created an opportunity for researchers to observe what happens when regulation restricts the availability of one of the most widely used assets in the crypto market.
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Traders Didn’t Disappear. Part of the Activity Shifted to USDC
The study’s authors compared exchanges more oriented toward the European and regulated environment with globally focused platforms where MiCA had a smaller immediate impact.
On exchanges more exposed to European regulation, the relative importance of USDC increased after the change. According to the study, its share rose by 0.82 standard deviations compared to the period before the regulatory change, while relative trading volume increased by 0.54 standard deviations.
This doesn’t simply mean that USDC’s share jumped by 82 percent. The authors use standard deviations to express the magnitude of the change in relation to normal fluctuations before the regulatory intervention.
Even more important is the explanation for this shift. The study concludes that the change wasn’t primarily caused by rapid growth of the entire stablecoin market. It was mainly driven by a contraction of trading with USDT on platforms where this stablecoin was removed from the offering.
So according to current results, MiCA hasn’t caused a massive flight of investors from stablecoins. Instead, it has changed the path their capital takes.
USDT Nevertheless Remains Much Larger Globally
The European shift certainly doesn’t mean the end of Tether’s global dominance yet.
According to CoinGecko’s historical data for USDT, its market capitalization on July 26 reached approximately 184 billion dollars. For USDC, CoinGecko recorded on the same day approximately 72.5 billion dollars. By this measure, Tether is still more than twice as large.
| Stablecoin | Market Cap July 26, 2026 | Situation in the EU |
| USDT | approximately 184 billion USD | availability on regulated platforms affected by MiCA rules |
| USDC | approximately 72.5 billion USD | issued in the EU in compliance with MiCA |
| Ratio | USDT is more than 2.5× larger | USDC has regulatory advantage in the EU |
This illustrates an important difference between the global and European crypto markets. An asset can remain dominant on a global scale while simultaneously gradually losing position in a specific jurisdiction.
If the trend continues, Europe could become a region where the structure of the stablecoin market is significantly different from, for example, some Asian or Latin American markets.
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Regulation can itself influence winners and losers
MiCA was presented primarily as a tool to protect investors and create uniform rules for cryptocurrency companies across the European Union. However, the results of a new study show another effect: regulation can indirectly influence the competitive environment between individual cryptocurrency projects.
Circle adapted to European rules relatively early. Its French entity began issuing USDC and the euro stablecoin EURC in compliance with MiCA as early as July 2024.
This gave the company an advantage when some European crypto exchanges began restricting stablecoins whose regulatory status did not meet the requirements of the new regime.
For Circle, this also represents a significant business effect. The company generates a considerable portion of its revenue through the reserves backing USDC. Reuters reported in May that the volume of USDC in circulation at the end of the first quarter of 2026 increased year-on-year by 28 percent to $77 billion, while the company’s combined revenue and income from reserves reached $694 million for the quarter. According to Reuters, the company was helped by growing interest in stablecoins and a clearer regulatory environment.
However, this does not automatically mean that European regulation is the sole cause of USDC’s growth. Demand for stablecoins is also influenced by the situation in cryptocurrency markets, interest rates, geopolitical uncertainty, or regulatory changes in the United States.
What changed in the Czech Republic from July 1
The impact of MiCA is not just a foreign issue. In the Czech Republic, the transitional period ended on July 1, 2026, during which some existing cryptocurrency service providers could continue operating upon meeting specified conditions.
After its conclusion, services related to crypto-assets may be provided by companies with the appropriate authorization under MiCA or by certain regulated financial institutions upon meeting specified conditions. The Czech National Bank warned before the end of the transitional period that the vast majority of entities providing crypto services in the past could no longer continue under the previous regime.
As of July 1, the CNB announced the granting of crypto licenses to 11 entities. Companies that did not obtain permission, according to the central bank, may not continue to acquire new clients and must inform their existing customers about the next steps.
For Czech investors, it is becoming increasingly important not only which cryptocurrency they are purchasing, but also through which provider they are executing the transaction.
The CNB recommends that clients verify the authorization of individual providers in the European ESMA register.
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Does MiCA mean that USDC is safer than USDT?
Such a simple conclusion cannot be drawn from the new study. MiCA means that the European issuance of USDC takes place within a regulatory framework that sets specific requirements, for example regarding the issuer and handling of reserves. However, this does not mean that holding a stablecoin is risk-free or that it is equivalent to an insured bank deposit.
But primarily, the study by Borri and Shakhnov itself does not claim that European investors began voluntarily preferring USDC on a larger scale because they consider it safer.
The results show something different – when regulation changed the availability of individual stablecoins on exchanges, users’ trading behavior subsequently changed as well.
This is a significant difference. The study captures the effect of regulatory supply restriction, not necessarily a change in investors’ opinions about the quality of both assets.
MiCA shows its true power
This is where the most interesting conclusion of the new work lies. Regulation does not have to cause a dramatic exodus of investors from the market to have a fundamental impact.
It is enough to change which platforms and assets they can easily move capital through.
The research by Borri and Shakhnov suggests that this is exactly what is happening in Europe. Overall stablecoin trading did not collapse significantly after the regulatory intervention. However, where exchanges restricted USDT, the structure of trading shifted toward USDC.
For the cryptocurrency sector, this is an important signal. In the past, winners among stablecoins were determined primarily by liquidity, availability on exchanges, investor confidence, and network effects. In the European Union, another factor is entering this equation increasingly prominently – regulatory compatibility.
If a similar development is confirmed in further data, MiCA will not only be a set of rules determining who may operate cryptocurrency services in Europe. It may gradually also influence which digital assets gain the most space in the European market.
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