Written by: Alex Liu, Foresight News
Stablecoin Legislation and FXS
On May 20, the U.S. stablecoin legislative bill, the GENIUS Act, passed a Senate vote, with two major steps remaining before official enactment: a House vote and presidential signature. The market previously believed the Senate vote was the biggest hurdle for the bill, and barring any unexpected developments, its complete passage seems to be just a matter of time.
Which crypto project is the biggest winner of this legislative victory? Looking at token price performance, it might be Frax Finance.
With the bill's passage in the Senate, Frax Finance's token FXS (currently renamed to FRAX, not yet updated on centralized exchanges) briefly rose above 4.4 USDT, topping the gainers list on major exchanges. Even with a slight price pullback, the monthly gain for FXS still exceeds 100% when viewed over a longer timeframe.
Why is this bill favorable to Frax Finance, and why are some people viewing Frax as the biggest winner of the GENIUS Act?
Frax Finance
Frax Finance's products are not limited to stablecoins, but also include liquidity staking, lending, L2, and more. However, they have a deep connection with stablecoins. Frax was once the issuer of the hybrid algorithmic stablecoin FRAX, but after the Luna UST collapse, they abandoned the "algo-stables" track and transitioned to a fully collateralized stablecoin.
Subsequently, FRAX was further updated to frxUSD, collateralized by fiat currency, with the "entire roadmap aimed at becoming the first licensed fiat currency stablecoin".
Frax Founder Sam Hints Frax Benefits Most from the Bill
But how can frxUSD become the "first" licensed fiat currency stablecoin ahead of products like USDC and USDY? In terms of regulation, it indeed has a "first-mover advantage".
Frax Finance's founder Sam Kazemian has frequently shared photos of himself with crypto legislative figures in Washington D.C. since the beginning of this year. He is reportedly deeply involved in the discussion and drafting of the GENIUS Act as an industry insider. The market seems to be pricing in the regulatory advantage Frax Finance might gain.
Sam with Crypto-Friendly Senator Lummis
If the speculation is true, as a drafter and participant of the bill, Sam naturally has a deeper understanding of the GENIUS Act and can more easily ensure his project meets the requirements. Additionally, friendly relationships with legislators might potentially open a regulatory green light for FRAX's future.
FRAX's Future Roadmap
Besides potential regulatory advantages, FRAX is building a vertically integrated stablecoin ecosystem, including frxUSD (stablecoin), FraxNet (banking interface), and Fraxtal (L2 execution layer), to adapt to future regulatory environment needs:
frxUSD: A stablecoin pegged 1:1 to the U.S. dollar.
FraxNet: A banking interface aimed at connecting traditional finance with DeFi.
Fraxtal: An L2 execution layer (potentially gradually moving towards L1), providing efficient transactions and scalability.
Token restructuring is also part of FRAX's future plans. FXS has been renamed to FRAX and given functions such as gas, governance, burning, and staking. This adjustment aims to enhance FRAX's functionality and market competitiveness, making its operations more flexible in a compliant environment.
Staking FRAX to become veFRAX can potentially earn rewards such as FXTL (Frax's own points), Karak, Ethena, and Symbiotic points.
With the founder actively participating in stablecoin-related legislation and proactively adjusting the product roadmap to serve the narrative, the performance of FXS (FRAX) is worth further anticipation as the GENIUS Act is further implemented.
