Stablecoin Trading Volume Surge 77.5% in November: What to Know

Following the rise in its trading volume, the stablecoin market cap soared to $190 billion, with Tether and USDC leading the way.

The Stablecoin Market Leaders

According to the latest data from CCData (a crypto data and index provider), stablecoin trading volumes climbed to $1.81 trillion, a 77.5% rise compared to October. This spike puts centralized exchanges on course for a yearly trading volume peak, demonstrating growing institutional trust in digital assets.

In November, the entire market capitalization of stablecoins increased by 9.94% to a record $190 billion. This surpasses the previous high of $188 billion set in April 2022, before TerraUSD’s (UST) collapse.

Despite the market’s expansion, the dominance of the fiat-pegged coins declined to 5.54% from 7.22% in October as traders shifted their cash to Bitcoin and altcoins. Nevertheless, Tether’s USDT maintained its supremacy, with its market capitalization rising by 10.5% to $133 billion, accounting for 69.9% of the stablecoin market.

USD Coin (USDC), the second-largest stablecoin, saw its market capitalization increase by 12.1% to $38.9 billion, its biggest figure since February 2023.

Ethena Labs’ USDe Gains Momentum

Meanwhile, Ethena Labs’ USDe stablecoin also had a notable performance this past month, with its market capitalization increasing by 42.2% to $3.86 billion. The surge is due to increased interest in the Ethena ecosystem, fueled by a new proposal to split revenue with Ethena (ENA) token holders.

Nonetheless, USDe’s annual percentage yield (APY) fell to 21.2%, a drop from its March high of 55.9%. While many fiat-pegged coins witnessed growth in their market caps, First Digital USD (FDUSD) and Sky Dollar (USDS), previously Dai (DAI), had huge decreases.

FDUSD’s market capitalization declined 14.9% to $1.90 billion, while USDS’ market cap fell 8.34% to $950 million.

Non-USD Stablecoins Could Boost Cryptocurrency Adoption Globally

According to recent research by Quinlan & Associates and blockchain developer IDA, fiat-pegged coins and other cryptocurrencies account for only 0.2% of global e-commerce transactions. The analysis stated that the dominance of USD-pegged stablecoins and regulatory uncertainties inhibit further adoption.

While these fiat-pegged coins provide cost savings, programmability, speedier transactions, and 24/7 availability, their application is primarily limited to the Web3 environment. According to Lawrence Chu, CEO of IDA, stablecoins offer benefits that conventional systems cannot match.

However, he stated that broader acceptance depends on regulatory certainty and diversification into non-USD-pegged options.

Market Demand for Non-USD Stablecoins

The analysis identified a significant gap in the supply of fiat-pegged coins tied to non-USD currencies. Approximately 83% of the world’s countries do not use the US dollar as their official or secondary currency, and 40% of international payments are made in other currencies.

According to CoinMarketCap data, USD-backed assets like Tether (USDT) and USD Coin (USDC) account for roughly $200 billion of the total stablecoin market. Benjamin Quinlan, CEO of Quinlan & Associates, noted that the lack of non-USD pegged coins represents a missed opportunity to boost adoption, particularly in regions where the USD is not the preferred currency.

Accordingly, IDA plans to introduce a Hong Kong dollar-pegged coin to resolve this issue. This fiat-pegged coin aims to improve cross-border payments between Hong Kong and global financial markets.

Regulatory Barriers Impede Adoption

Regulatory ambiguity remains the most significant impediment to mainstream stablecoin use. According to the report, 81% of merchants hesitate to integrate these fiat-pegged coins into payment systems due to unclear rules.

In a recent interview, Former US Senator Pat Toomey predicted lawmakers would consider laws for these fiat-pegged coins by 2025. However, he noted that reserve requirements, deposit insurance, and regulatory control for stablecoin issuers are among the critical areas of concern.

Meanwhile, these fiat-pegged coins influence financial markets, particularly short-term US government debt. In October, the US Treasury Department stated that the increased demand for Treasury bills is partly fueled by stablecoin collateral.

With new legislation, such as the Clarity for Payment Stablecoins Act, likely to be considered in the next congressional session, the regulatory landscape for these fiat-pegged coins could drastically change in the next few years.

Tether Ends Support for the Euro Stablecoin

Meanwhile, Tether, the USD-pegged coin (USDT) issuer, has announced that it will end support for the Euro-pegged coin (EURT) due to regulatory challenges. Hence, the business has stopped minting EURT across all blockchains and encouraged users to redeem their holdings within a year.

Tether CEO Paolo Ardoino has previously criticized MiCA laws, claiming that the framework introduces “systemic” dangers for fiat-pegged coins in the banking industry.