The stablecoin bill has been passed, why does FRAX become the biggest winner?

Written by: Alex Liu, Foresight News

Stablecoin Legislation and FXS

On May 20, the U.S. stablecoin legislation, the "GENIUS Act," passed a vote in the Senate, with two main steps remaining for formal approval: a vote in the House of Representatives and submission for the President's signature. The market previously viewed the Senate vote as the biggest obstacle to the bill's passage, and barring any surprises, the complete approval of the bill is just a matter of time.

Which crypto project is the biggest winner of this legislative victory? From the performance of the token prices, it could be Frax Finance.

With the passage of the bill in the Senate, the Frax Finance token FXS (now renamed FRAX, not yet updated on centralized exchanges) once surged above 4.4 USDT, ranking first on the mainstream exchange gainers list. Even though the price has slightly corrected at the moment, looking at the longer time frame, FXS has still increased by over 100% within the month.

Why is the bill beneficial for Frax Finance, and why do some people see Frax as the biggest winner of the GENIUS bill victory?

Frax Finance

Frax Finance's products are not just stablecoins; they also include liquid 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 collapse of Luna UST, it abandoned the "algorithmic stability" track and transformed into a fully collateralized stablecoin.

Since then, FRAX has been further updated to frxUSD, using fiat currency as collateral, "the entire roadmap is to become the first licensed fiat currency stablecoin."

Frax founder Sam hinted that Frax would benefit the most from the bill.

But why can frxUSD become the "first" licensed fiat stablecoin ahead of products like USDC and USDY? From a regulatory perspective, it does have the possibility of "gaining the advantage by being close to the source."

Sam Kazemian, the founder of Frax Finance, has frequently shared photos of himself with crypto legislators in Washington, D.C. since the beginning of this year. It is rumored that he, as an industry insider, has been deeply involved in the discussion and drafting of the "GENIUS Act." The market seems to be pricing in that Frax Finance will have regulatory advantages as a result.

Sam took a photo with crypto-friendly Senator Lummis.

If the speculation is true, as the drafter and participant of the bill, Sam naturally has a deeper understanding of the "GENIUS Act" and it is easier for his project to meet the requirements. In addition, it is uncertain whether a friendly relationship with lawmakers will open the regulatory green light for FRAX's future.

The future roadmap of FRAX

In addition to the potential regulatory head start, FRAX is building a vertically integrated stablecoin ecosystem, including frxUSD (stablecoin), FraxNet (banking interface), and Fraxtal (L2 execution layer), to meet the demands of future regulatory environments:

frxUSD: As a stablecoin of FRAX, it is pegged to the US dollar at a 1:1 ratio.

FraxNet: A banking interface designed to connect traditional financial systems with DeFi.

Fraxtal: A Layer 2 execution layer (or gradually transitioning to Layer 1), providing efficient transactions and scalability.

Token restructuring is also part of FRAX's future plans. FXS has been renamed to FRAX and endowed with functions such as Gas, governance, burning, and staking. This adjustment aims to enhance the functionality and market competitiveness of FRAX, making its operations more flexible in a compliant environment.

By staking FRAX for veFRAX, one can receive potential rewards such as FXTL (Frax's own points), Karak, Ethena, and Symbiotic points.

The founder actively engages in the legislation related to stablecoins and adjusts the product roadmap to focus on narrative services. With the further implementation of the "GENIUS Act," the performance of FXS (FRAX) is worth looking forward to.