USDC continues its remarkable trajectory, growing 10x over the course of 2021. Lets take a look at what’s driving the growth and what’s next.
It was just a little over a month ago, on December 5, 2021, that USD Coin (USDC) celebrated the $40 billion milestone, and already the dollar digital currency has reached a $50 billion market cap as of January 31, 2022. As USDC continues its remarkable trajectory, growing 10x over the course of 2021, people want to know what’s driving the growth and what’s next.
USDC Growth by the Numbers
According to Circle’s internal data aggregations, USDC’s growth since 2021 extends beyond just hitting $50 billion in market cap.
- Over 100 billion USDC issued with over 50 billion in circulation (as of January 31, 2022)
- 10,000% growth over 2 years
- Nearly $2.5 trillion in on-blockchain payments and settlements in 2021, and 4.6 million active wallet addresses with USDC transactions in 2021
- Currently available on 8 blockchains
- More than 200 blockchain protocols supporting USDC
- 34 leading exchanges available in 180+ countries supporting trading and converting USDC, providing liquidity and convertibility to key currency markets around the world
- 223 digital wallets available to users in over 175 countries supporting USDC transactions according to combined data from Apple and Google Play Stores
What is Driving USDC’s Growth?
In an always-on global economy, markets and individual’s financial needs do not take bank holidays. The advent of trusted digital currencies like USDC are enabling a wide range of use cases from a "flight to safety" during inflation, borderless transactions and payments to a medium of exchange in DeFi.
1. A Safe Haven for Your Money
We have seen increased adoption of assets like USDC as a "flight to safety", especially in countries where local currency is suffering from a valuation loss. With inflation rates in the United States at its highest levels in nearly 40 years, and potential rate hikes1 from the Federal Reserve, digital dollar currencies are also gaining momentum as viable alternatives to the dollar bill.
The potential of multiple rate hikes also gives USDC, a dollar-pegged stablecoin, the opportunity to capture the upside of a stronger valued dollar. Investors from foreign countries will likely want to capitalize and benefit from the strengthened dollar against weaker currencies by converting their fiat currencies to USDC.
2. Borderless Transactions
With USDC, consumers can choose to hold a dollar-denominated stablecoin and carry out cross-border transactions with only a mobile phone or internet connection. In a world where ‘Digital Transformation’ is continuing to drive innovations, near instantaneous and cost effective transactions are possible with the likes of a digital currency like USDC.
At Circle, relationships with innovative brands like MoneyGram and Bitso have made global payments and remittances a much easier experience for individuals and families in markets like Latin America, Africa (South Africa and Nigeria) and in Asia (India and the Philippines).
By leveraging Circle’s infrastructure and suite of APIs, additional communities around the world can use exchanges and wallets to connect their currencies and use USDC to experience the borderless and efficient payment transactions.
3. Increased Usage for Payment Use Cases
Over the course of 2021 and the beginning of 2022, USDC is becoming a trusted payment method. Through partner relationships with brands like Visa, MasterCard and Plaid, Circle and USDC are making it easier for millions of additional consumers to access and use USDC, one of the fastest growing digital dollar assets.
Circle and USDC are also enabling businesses across industries to integrate with key APIs and payments infrastructure in order to efficiently and safely transact USDC. From developing payment rails for a trade finance organization to allowing donation efforts to be made in USDC, more businesses and consumers are now able to easily access the growing digital dollar.
4. Multichain Availability
The availability of USDC on multiple new chains across the crypto ecosystem has added to the growing market cap of USDC. One of the leading digital dollar currencies, USDC is available on 8 chains and counting, with four coming on line in 2021: Stellar, Tron, Hedera, and Avalanche.
Circle is creating a broader digital commerce use case where customers across any of these blockchains can accept payments at scale, maintain accounts infrastructure, and send and receive USDC.
5. The World of Digital Assets is Not Slowing Down
Throughout January 2022, digital asset markets have experienced massive volatility, dropping more than $1.35 trillion in value according to CoinMarketCap. Still, USDC has continued growing. Digital assets continue to attract new investors and users, both at the individual and institutional level. Each of these users relies on USDC as a medium of exchange to power an array of new, innovative internet commerce.
The world of cryptocurrencies continues to evolve - individuals and businesses are now hunting for high yield interest rates on their custodied digital currencies, DeFi lending and borrowing grew tenfold in 20212, and we approached nearly 300 million crypto3 users around the globe by the end of 2021.
6. Circle’s Broad Product Suite
USDC is the foundation of every Circle product and every Circle product reinforces USDC’s growth.
- The Circle Account provides businesses and financial institutions with a platform to make payments and store funds in USDC. The Circle Account enables businesses to make and receive payments nearly instantly and globally to any blockchain-compatible digital wallet, providing an efficient and cost-effective alternative to traditional bank payment rails. The number of Circle Account customers grew 213% from 2020 to the end of 2021.
- Circle’s APIs extend the capabilities of the Circle Account through a comprehensive suite of APIs that allow customers to fully automate and integrate Circle payments and treasury infrastructure into their own payments, commerce and financial applications. Payments API processing volume grew 36x in 2021 compared to 2020 (The Payments API service started in May 2020). The monthly transaction volume for the Payments API grew 5x in 2021.
- Circle Yield* offers accredited investor customers the ability to generate enhanced fixed-term yield on their USDC holdings by investing in blockchain-based lending markets. Since Circle Yield was launched in June in limited access form, we have seen 93% average monthly growth in TVL (Total Volume Lent) and 45% average monthly growth in our customer base. As of November 17, 2022, Circle Yield is not accepting new loans. We are evaluating future updates to the program.
$50 Billion and Counting
Launched in 2018, USDC’s growth has been remarkable, and it’s still in the early stages like all innovations in the broader crypto and blockchain industry.
As the global economy continues to gain interest in the world of digital assets, the demand for digital currencies like USDC will likely continue to grow exponentially. Reaching $50 billion is certainly an impressive feat, and with the need for improved and borderless payment solutions combined with new technology, we can expect USDC and the broader crypto-economy to keep rising.
1 "Fed Preview: How Rate Hikes Could Stimulate Demand for Stablecoins", 02/01/2022, Coindesk
3 "There could be 1 billion global crypto users by the end of 2022, and more than half will own Bitcoin", 02/01/2022, Cryptoslate
* Offering subject to business approval, geographical availability, and regulatory authorization, and there is no guarantee that the product will become available in a specific timeframe or to a specific customer or geography. Circle Yield product offered through Circle International Bermuda Limited (“Circle Bermuda”). Circle Bermuda has entered into lending arrangements with one or more institutional borrowers, including Genesis Global Capital, LLC**. These borrowers pledge and transfer Bitcoin into custody with a third party custodian as collateral for their USDC borrowings and Circle Yield investors benefit from a security interest in Circle Bermuda’s security interest in the pledged Bitcoin. Not currently available in the following U.S. states: Alaska, New York and Hawaii. Rates are purely indicative and are subject to change pending availability, approval and market conditions.
Circle Account and money transmission services are provided by Circle Internet Financial, LLC. Circle Internet Financial, LLC, NMLS # 1201441, is a licensed provider of money transmission services. A full list of Circle’s licenses can be found at /legal/us-licenses.
Circle is not a bank; your Circle Account is not a bank account, and any funds are not insured by the Federal Deposit Insurance Corporation, the Securities Investor Protection Corporation or by any US or foreign government agency, insurance fund, person or entity. For investors in the United States, investments described in this communication are offered by Circle Bermuda to “accredited investors” only in accordance with Regulation D, Rule 506(c) of the Securities Action of 1933, as amended. While Circle Bermuda is regulated by the Bermuda Monetary Authority for digital asset business, Circle Bermuda is not engaged in banking and deposit taking activities and is not regulated for these purposes. You should carefully conduct your own investigations and analyses in connection with any participation in this product, including its objectives, risk factors, fees and expenses and the information set forth in these materials. All prospective participants in the products described herein are advised to consult with their legal, accounting and tax advisers regarding any potential participation. Please read the offering documents carefully before you invest. Additional information is available upon request.
**Learn more about Genesis Global Capital, LLC at https://genesistrading.com/.
