From CRCL to FRAX: The Next GENIUS Act Beneficiary

Author: 100y Source: Four Pillars Translation: Shan Ouba, Golden Finance

Key Points

• On June 5, 2025, USDC issuer Circle successfully listed on the New York Stock Exchange, injecting new vitality into the entire stablecoin industry. Thanks to the crypto-friendly political environment in the United States, Circle has attracted the attention of numerous investors with its vertically integrated product strategy.
• With the explosive attention on Circle, people naturally begin to look for the next winner under the GENIUS Act. There is a stablecoin protocol that feels reminiscent of Circle and is leading the industry with a similar strategy: Frax Finance.
• Frax Finance is a stablecoin protocol that issues the stablecoin frxUSD, compliant with the GENIUS Act. It goes beyond simple issuance and positions itself as a stablecoin operating system, providing FraxNet (a front-end that supports the easy use of frxUSD) and Fraxtal (a high-performance blockchain that underpins frxUSD).
• The three main components of the financial system are currency, front-end, and back-end. From the perspective of the development of the financial industry, the currently inefficient back-end systems will gradually shift towards blockchain. In this trend, systems based on stablecoins also consist of three components: stablecoins, front-end, and blockchain network. Frax Finance is one of the few projects that simultaneously builds these three elements, presenting a vertically integrated development direction.
• Frax Finance is at an important turning point in opening a new chapter. From the political leadership of the founders in shaping the original draft of the GENIUS Act, to the vision of vertically integrated products realized through the stablecoin operating system, and the thorough transformation of the protocol through the Polaris upgrade, Frax Finance is more prepared than anyone for the future envisioned by the GENIUS Act.

1. What is the secret to the successful debut of "Circle"?

1.1 The Victory of the Stablecoin Industry

Source: CNBC

On June 5, 2025, Circle went public on the New York Stock Exchange (NYSE) under the ticker symbol CRCL. The IPO issue price was set at $31 per share, higher than the initially expected range of $27-28, raising approximately $1.1 billion. On its first trading day, Circle's opening and closing prices were $69 and $83, respectively, and as of August 25, 2025, the stock price was around $135. This made Circle one of the most successful IPO cases.

The significance of Circle's listing on the New York Stock Exchange goes far beyond this; it is a milestone in itself. Coupled with the passage of the GENIUS Act, the relaxation of regulations by the U.S. Securities and Exchange Commission (SEC), and the friendly attitude of the Trump administration towards cryptocurrencies, this marks a point where cryptocurrency companies can enter traditional financial markets. Furthermore, Circle's booming response in the public market has also bolstered confidence in the flourishing development of stablecoin infrastructure within the traditional financial sector.

In other words, Circle's listing is not just a success for itself, but a victory for the entire stablecoin industry.

1.2 Circle's vertical integration strategy

Source: Circle

Circle is one of the largest stablecoin issuers in the world, offering USDC pegged to the US dollar and EURC pegged to the Euro. In addition, Circle is committed to building a new financial system based on the internet and offers a rich array of products, such as:

• Circle Payment Network (CPN): Circle's global funds transfer standard, designed to be a blockchain-based alternative to SWIFT. Financial institutions and businesses using CPN can efficiently process cross-border remittances and settlements through Circle's infrastructure and various public blockchains. For more information, please refer to "CPN: Towards a Digitally Native SWIFT".
• Circle Mint: Circle Mint integrates with traditional banking networks (such as wire transfers and SEPA), allowing businesses and institutional users to mint USDC and EURC instantly and exchange them for fiat currency at a 1:1 ratio. It is noteworthy that Circle Mint is the only official channel for the direct issuance of USDC.
• Circle Wallets: A wallet SDK service that enables Web2 companies to easily integrate blockchain-based wallets into their services. In addition to basic wallet functionality, it offers account abstraction, MPC-based security, RPC nodes for transaction broadcasting, compliance options, multi-chain support, and more.
• CCTP: Due to the native issuance of USDC on over 20 networks, liquidity fragmentation may occur. Circle's cross-chain messaging protocol CCTP enables the secure transfer of USDC across different blockchains through a "burn-mint" mechanism.
• Circle Paymaster: Circle's account abstraction feature based on ERC-4337. Users do not need to use ETH to pay blockchain fees; Circle Paymaster allows users to pay fees with USDC or receive fee sponsorship, enabling gas-free transactions.
• USYC: By the end of 2024, Circle acquired the issuer of USYC, Hashnote, and incorporated it into its product line. USYC is a tokenized money market fund composed of U.S. Treasury bonds and reverse repurchase agreements. Institutional clients holding USYC can earn stable on-chain yields, and the token can also be used as collateral for margin on exchanges such as Deribit and Binance.
• Arc: Launched in August, Arc is Circle's L1 network focused on USDC, utilizing a high-performance consensus algorithm aimed at enabling seamless and efficient use of USDC. For more details, please refer to "Circle Launches Arc: A Strategy Similar Yet Different from Tether."

In this way, Circle not only issues stablecoins but also builds infrastructure that allows institutions and retail investors to easily use stablecoins. This infrastructure encompasses issuance, wallet infrastructure, cross-chain bridges, Layer 1 networks, account abstraction features, and institutional solutions, serving as a model of vertical integration in product strategy.

From the perspective of user experience, Circle's product lineup showcases its strengths. Imagine a company utilizing Circle's products: it can instantly mint and redeem USDC at a 1:1 ratio through Circle Mint; even if customers are not familiar with Web3, they can easily access stablecoin features through Circle Wallets, Paymaster, and CCTP; employing the Arc blockchain to achieve the most seamless and efficient use of USDC; and relying on CPN to transact and settle with other financial institutions and businesses.

The core of stablecoins is not issuance, but practicality. While it is crucial to securely issue stablecoins through collateral design and regulatory frameworks, issuance is meaningless without real use cases. Circle's vertically integrated product roadmap lays the foundation for the widespread application of stablecoins in the real world and on-chain ecosystems.

1.3 Circle Why it is gaining attention

So, why has Circle received such enthusiastic attention from the blockchain industry and even the traditional financial market? In addition to product factors, the current political environment and Circle's business model have also played a role.

• Passage of the GENIUS Act: The GENIUS Act is the first federal law in the United States that explicitly regulates USD stablecoins, having the most direct impact not only on Circle but also on the entire stablecoin industry. This act establishes the legal status of stablecoins, the obligations of issuers, and consumer protection requirements. It provides a legal basis for U.S. institutions and companies to issue stablecoins. In fact, Circle's internal operational guidelines have been codified as legal standards, granting Circle legitimacy and compliance.
• Trump's administration's pro-cryptocurrency policy: Even before the inauguration, the Trump administration announced strong support for cryptocurrencies. On July 30, 2025, the President's Digital Asset Market Working Group under the Trump administration released a 160-page cryptocurrency policy report. The report proposed a specific roadmap aimed at positioning the United States as the global cryptocurrency capital.
• U.S. Securities and Exchange Commission ( SEC ): The new SEC Chair Paul Atkins ( Paul Atkins ) also supports cryptocurrency, and compared to Gary Gensler ( Gary Gensler ), his regulatory stance is much more lenient. After the White House released its cryptocurrency policy roadmap, the SEC quickly announced a plan called "Project Crypto" ( Project Crypto ), which aims to make the regulation of the U.S. cryptocurrency industry clearer.
• Market Share: Circle has issued the second largest stablecoin in the world, USDC. Currently, the supply of USDC is approximately $63 billion, accounting for about 30% of the total stablecoin market. Considering that USDT cannot comply with the provisions of the GENIUS Act due to its collateral composition, USDC is the largest compliant stablecoin under U.S. regulation to date.
• Business Model: Circle's main revenue comes from managing USDC reserves through government bonds, repurchase agreements, and similar instruments. In the second quarter of 2025, Circle generated revenue of $658 million, with adjusted EBITDA of $126 million, demonstrating an attractive revenue structure and robust operating profit margins.

The current political environment in the United States provides an excellent opportunity for Circle to gain attention, while also laying the groundwork for the rapid growth of the entire stablecoin industry.

( 1.4 South Korean investors, LFG!

![])https://img-cdn.gateio.im/webp-social/moments-d8fe48631d166887c6e5023dce7ae4f8.webp###

Interestingly, Circle is not only popular in the United States but also in other countries. In fact, in the ranking of the most purchased overseas stocks by South Koreans in June 2025, Circle (CRCL) topped the list with a net purchase amount exceeding $600 million. This transaction is 1.6 times that of the second-ranked Tesla 2X ETF and 4 times that of the third-ranked Coinbase, far surpassing Alphabet ($100 million) and Apple ($90 million).

Why has Circle attracted such strong interest in South Korea? Of course, many Korean investors are actively trading U.S. stocks, but a deeper reason is that the Korean market itself is experiencing a surge in interest in stablecoins. In June 2025, President Lee Myung-bak took office and announced strong support for the legalization of stablecoins. This became a powerful catalyst for Koreans' interest in the stablecoin industry.

Of course, due to strict foreign exchange laws, the conservative stance of the Bank of Korea, and the relatively small size of the short-term bond market, South Korea still faces numerous obstacles before the full legalization of the Korean won stablecoin. However, whenever a specific company or institution applies for a trademark related to stablecoins, its stock price tends to soar, indicating that the interest in stablecoins is not only prevalent in the blockchain industry but also extends to regular stock market investors.

2. Finding the Next GENIUS Bill Winner

( 2.1 Who will be the next CRCL?

With Circle's successful listing, the company and investors naturally turned their attention to the stablecoin sector, looking for which companies and protocols could benefit the most from the GENIUS Act after Circle. Coinbase is often mentioned as a beneficiary, as Circle allocated nearly half of its USDC reserve income to Coinbase. In the second quarter of 2025, Circle's total reserve income was $634 million, of which more than half, or $332.5 million, was paid to Coinbase.

Apart from companies like Coinbase that benefit indirectly, are there any publicly listed companies like Circle that can directly issue stablecoins compliant with the GENIUS Act and profit from it? Unfortunately, there are none at the moment. Among the companies listed on the US stock market, there is not a single one that directly issues stablecoins compliant with the GENIUS Act. The second largest stablecoin issuer in the US, Paxos, remains a private company.

) 2.2 On-chain Opportunities

Even if there is no "next Circle" in the stock market, there is no need to be disappointed. Because there are still stablecoin protocols on-chain issuing dollar stablecoins that comply with the GENIUS Act. Currently, there are only two protocols trying to issue compliant stablecoins in the market: Ethena and Frax Finance.

![LPWI0Pva0LNB8W3HhXgmKnJZS4EhGZkWdMfJNgP1.png]###https://img-cdn.gateio.im/webp-social/moments-77f0ea5a9e8c919e593d90db0a293efe.webp "7396723"###

Ethena offers two types of stablecoins: USDe and USDtb. USDe does not comply with the GENIUS Act because its reserves rely on neutral hedge positions in the futures market. The reserves for USDtb consist of the MMF fund BUIDL and stablecoins. More importantly, the issuance of USDtb was previously conducted in the British Virgin Islands, and as of July 2025, it has been transitioned to issuance through Anchorage Digital Bank, thereby preparing for compliance with the GENIUS Act.

The stablecoin issued by Frax Finance is frxUSD, and its reserves consist of various dollar-denominated MMF tokens and U.S. Treasury fund tokens. It is noteworthy that the founder of Frax Finance, Sam Kazemian, is one of the key figures in promoting the legislation of the GENIUS Act.

In March of this year, Sam met with Senator Cynthia Lummis, a co-sponsor of the GENIUS Act, and provided advice and support during the drafting process, laying the groundwork for the legal framework of the digital dollar.

Unlike other protocols, Frax Finance not only builds products that drive its own business development, but also actively participates in regulatory discussions, working closely with legislators to jointly formulate a regulatory framework. This is a typical "policy entrepreneurship" model. As the founder personally participated in the drafting of the bill, Frax Finance has an unparalleled understanding of the GENIUS bill and is able to ensure that the design of frxUSD is consistent with regulations.

3. frxUSD: The First Stablecoin Compliant with the GENIUS Act

( 3.1 Frax's Stablecoin Operating System

![Zdg7w5PdMxlsGGVDBg8yrwL5bNfZo2SRpG1JnBNs.png])https://img-cdn.gateio.im/webp-social/moments-9d1e6343bc70d358e5319fed3c830915.webp "7396725"###

Frax Finance aims to issue stablecoins in a compliant and reliable manner, and to build scalable infrastructure that allows stablecoins to be widely used. To this end, Frax Finance has proposed Stablecoin OS, which includes three core products:

• frxUSD: A stablecoin compliant with the GENIUS Act, and also a core liquidity asset within the Frax ecosystem.
• FraxNet: A platform where users can issue and redeem frxUSD in various ways and earn stable returns from compliant stablecoin non-custodial holdings.
• Fraxtal: A high-performance EVM L1 blockchain built for frxUSD, using FRAX as the gas token.

For stablecoins, issuance is certainly important, but the more critical aspect is their use. Frax Finance not only issues compliant frxUSD but also provides a user-facing platform called FraxNet, which allows for the convenient use of frxUSD. Additionally, it has built a dedicated ecosystem chain called Fraxtal specifically for frxUSD.

In this structure, frxUSD plays the role of "currency", FraxNet is equivalent to "financial technology and banking", and Fraxtal serves as the "backend" of the financial system. The collaboration of the three becomes the core engine of the frxUSD ecosystem.

In addition, Frax Finance also offers Fraxswap (trading), Fraxlend (lending), frxETH (Ethereum liquid staking protocol) and other services, thereby building a complete stablecoin and DeFi full-stack ecosystem.

( 3.2 frxUSD: The first stablecoin compliant with the GENIUS Act

![Hk8mTdac6AFC5YY29SuCSC3iQ7eWThlmw6l5NmTb.png])https://img-cdn.gateio.im/webp-social/moments-b76ce97c2f044903d782326927e91296.webp "7396726"###

Sam Kazemian, the founder of Frax Finance, was involved in the drafting of the GENIUS Act, giving him and his team a deep understanding of the legislation. Based on this regulatory expertise, Frax Finance officially began issuing frxUSD in February of this year—a compliance-focused stablecoin. So, what qualifies a stablecoin as compliant? Does frxUSD truly comply with the GENIUS Act?

The full text of the GENIUS Act can be easily found online; here are the key provisions summarized:

(In addition to the following provisions, the bill also involves requirements for external accounting audits, capital adequacy ratios, anti-money laundering compliance, and priority of bankruptcy payments, which pertain to internal operations and will not be discussed here.)

3.2.1 Issuance Eligibility

Only qualified issuers within the United States can issue stablecoins, with three categories in total:

1. Subsidiary of a bank or credit union;
2. Institutions approved by the OCC (Office of the Comptroller of the Currency);
3. Institutions approved by state financial regulatory agencies.

Through the FIP-432 governance proposal, all responsibilities related to the issuance, reserve management, and compliance of frxUSD are transferred to FRAX Inc.. FRAX Inc. is a company registered in the state of Delaware, USA, and must obtain approval from the OCC or state financial regulators to issue compliant stablecoins. Currently, FRAX Inc. is applying for a stablecoin issuance license.

3.2.2 Reserve Requirements

The core requirement of the GENIUS Act for reserves is 1:1 full collateral. That is: the total issuance of stablecoins must be supported by at least an equivalent amount of reserves. Reserve assets are limited to the following highly liquid assets:

• US cash or Federal Reserve account balance
• Demand deposits, withdrawable deposits, or custodial deposits and credit union shares
• U.S. Treasury bonds with a remaining or original term of no more than 93 days
• Overnight repurchase agreements participated in by the issuer as the seller (collateral being government bonds with a remaining term of ≤93 days)
• Overnight reverse repurchase agreement participated by the issuer as the buyer (collateral is U.S. Treasuries)
• Register government money market funds, or securities solely holding the above assets registered under the Investment Company Act of 1940.
• Other assets directly issued by the U.S. federal government that have similar liquidity and stability to the aforementioned assets.
• The tokenized form of the above assets

The reserves of frxUSD are entirely composed of tokenized assets, primarily including:

• USTB: The tokenized version of the short-term U.S. Treasury bond fund issued by Superstate.
• BUIDL: The tokenized version of the US dollar liquidity fund issued by BlackRock.
• WTGXX: The tokenized version of the government money market fund issued by WisdomTree.
• USDB: A stablecoin issued by Bridge (Stripe has acquired Bridge)
• USDC: A stablecoin issued by Circle

Therefore, the reserve assets of frxUSD comply with the requirements of the GENIUS Act and achieve over 100% collateralization, ensuring its stability.

3.2.3 Profit Distribution?

According to the GENIUS Act, stablecoin issuers may not pay users interest solely for holding or using stablecoins. This provision aims to prevent it from being misinterpreted as a deposit or investment asset, ensuring financial stability.

Therefore, frxUSD holders cannot earn interest solely by holding it. However, if users hold frxUSD within FraxNet, they can earn stable returns generated by bonds. On the surface, this seems to violate the law, but in reality, it does not. The reason is:

• The one paying the interest is not the issuer, but the distribution platform.
• FraxNet is operated by Frax Network Labs Inc., which is an independent Delaware-registered entity from the issuer.

Therefore, only users holding frxUSD within FraxNet can earn rewards. Users who store frxUSD in personal wallets such as MetaMask or on exchanges will not be able to earn interest.

This model is not unique to Frax; Circle's USDC and PayPal's PYUSD are similar. Coinbase pays approximately 4.1% interest to USDC users within its app, while PayPal pays about 3.7% interest to PYUSD users. This is feasible because Coinbase and PayPal are separate legal entities from the issuers Circle and Paxos.

4. FRAX Follows in the Footsteps of CRCL: Familiar Yet Slightly Different

So far, we have learned how Circle successfully went public and explored Frax Finance's frxUSD. But wait, when reading articles about Frax Finance, did you get a sense of déjà vu? The direction in which Frax Finance builds its stablecoin ecosystem is very similar to that of Circle.

( 4.1 The first sense of déjà vu: money

The first familiar aspect is reflected in the issuance methods of stablecoins. Circle and Frax Finance are both committed to issuing stablecoins that comply with the GENIUS Act, which are supported by reserves consisting of cash, short-term U.S. Treasury bonds, and repurchase agreements. These stablecoins are able to maintain a stable value and serve as a lubricant for the next generation of financial systems, much like currency.

In terms of the use of reserve interest income, Frax Finance may have more room than Circle to build a virtuous cycle within its ecosystem. All interest income from USDC reserves belongs to Circle, while the interest income from frxUSD reserves is used for frxUSD holders and team operations within FraxNet, with the remaining portion allocated to FRAX stakers, the core token holders of the Frax ecosystem.

This structure means that as more frxUSD is issued, the Frax ecosystem continues to develop, thereby increasing the issuance of frxUSD and forming a positive feedback loop.

) 4.2 The second déjà vu: Front-end

Circle provides a front-end with a high user experience, allowing USDC holders to easily use their stablecoins, such as 1) Circle Mint for easy issuance and redemption, 2) Circle Wallet for easy wallet integration, and 3) Circle Gateway for managing balances across multiple chains.

![]###https://img-cdn.gateio.im/webp-social/moments-74b4356b99bc70576b675be2e7dc904c.webp###

Source: FraxNet

Similarly, Frax Finance offers a user-friendly front end called FraxNet, which allows frxUSD holders to easily access a variety of financial activities:

• Multi-asset issuance: Users can issue frxUSD not only using stablecoins like USDC, USDT, PYUSD, and USDB but also through bank wire transfers or even RWA tokens like USTB and WTGXX. This is similar to Circle Mint.
• Embedded Wallet: Users can log into FraxNet using accounts like Google, and the system will automatically create a blockchain wallet for them. Even users who are not familiar with blockchain can easily access frxUSD. This is similar to the Circle wallet.
• Dashboard: FraxNet provides a dashboard that clearly displays various assets across multiple networks and supports easy transfers. This is similar to Circle Gateway.
• Passive Income: Users holding frxUSD in FraxNet can automatically earn stable bond interest income. Just like users holding USDC in the Coinbase app can earn yields, Frax Finance also provides interest income for frxUSD holders on FraxNet.

While multi-asset issuance or passive income is indeed very powerful, the four functions mentioned above are also essential foundations of modern financial services. FraxNet goes further, aiming to provide a more robust vertically integrated product and user experience than Circle Mint through the following roadmap.

• Virtual Visa Card: The FraxNet program has partnered with Stripe and Bridge to launch a virtual Visa card that connects to the Visa network. This will enable users to make real-world payments using FraxNet assets.
• Virtual Bank Account: Frax Finance is collaborating with Lead Bank to provide each user with a virtual bank account, supporting deposits and withdrawals through traditional banking networks. Integration with existing infrastructure can enhance the user onboarding experience.
• FraxNet Mobile: In 2026, FraxNet will launch an application that allows users to easily access FraxNet through their mobile phones, providing them with a complete mobile banking experience.

The goal of the stablecoin issuance protocol is not just to provide simple wallet, trading, monitoring, and yield opportunity services, but to build a complete user interaction lifecycle by supporting cards, banks, and mobile services that can be applied in real life.

( 4.3 The third familiar place: Backend

In the financial system, both the backend and the frontend are equally important. No matter how friendly the frontend is, if the backend efficiency of the actual fund flow is low, it cannot provide a good experience for users.

To achieve this goal, Frax Finance launched its own high-performance blockchain network, Fraxtal, in February 2024. Fraxtal is designed to be optimized for the Frax ecosystem, with the aim of becoming the orbit of frxUSD.

In fact, providing a backend optimized for its ecosystem has made Frax Finance a pioneer in the industry. Following Fraxtal, many stablecoin projects have begun launching blockchains optimized for their stablecoins:

• Converge: Ethena is collaborating with Securitize to develop the high-performance blockchain Converge, connecting DeFi and traditional finance around ENA and USDe.
• Stablecoins and Plasma Tokens: Tether has made strategic investments in stablecoins and plasma tokens, which are blockchain networks specifically designed for USDT transfers and payments.
• Arc: Circle recently launched its own blockchain Arc, optimized for USDC.

Ultimately, Frax Finance foresaw the direction of industry development. The launch of Fraxtal is not just another blockchain release, but a pioneering initiative pointing towards the future of financial infrastructure.

) 4.4 Stablecoin Trinity

![]###https://img-cdn.gateio.im/webp-social/moments-1eaed020cda5483755fa5545072f8833.webp###

The three main elements of today's financial system are currency, the front end, and the back end. We are able to conduct economic activities easily because fintech companies provide convenient front ends that connect us to the complex back ends of payments, securities, remittances, and more.

From the perspective of the financial industry's development, the complex and inefficient backend will gradually transition to blockchain. In this trend, the three fundamental elements of a blockchain-based financial system are stablecoins, frontend, and blockchain network. This is the trinity of stablecoins, and Frax Finance is one of the few projects that simultaneously builds these three elements, presenting a direction of vertical integration.

5. Towards the North Star

Source: Frax Finance

Since March of this year, Frax Finance has been preparing for the "GENIUS Act" and is committed to the Polaris upgrade, which will correspondingly transform the protocol. This upgrade includes renaming the original Frax protocol tokens FRAX and FXS to frxUSD and FRAX respectively, changing the gas token of Fraxtal from frxETH to FRAX, as well as making other significant adjustments, such as the token incentive structure.

Frax Finance is at an important turning point in opening a new chapter. From the political leadership demonstrated by the founder in the draft of the "GENIUS Act", to the vertically integrated product vision built through a stablecoin operating system, and now to the comprehensive transformation of the protocol through the Polaris upgrade, Frax Finance is preparing for the future envisioned by the "GENIUS Act" in an unprecedented way.

Some may think that Frax Finance is merely following the roadmap of Circle. However, the reality is quite the opposite. By launching the integrated front-end platform FraxNet and the blockchain Fraxtal specifically built for back-end infrastructure, Frax Finance proves that it is not only keeping up with the times but also actively shaping the trajectory of the stablecoin industry. These innovations highlight the pioneering position of Frax Finance, pointing out the potential direction that a broader ecosystem may follow in the future.

Just as navigators once followed the North Star to find their way, Frax Finance is also upgrading to guide the industry through the North Star. This is not just an upgrade, but a new reference point for the entire industry. Ultimately, Frax Finance will become a beacon leading the industry, like the North Star.