The Trump administration’s GENIUS Act, signed into law on July 18, 2025, imposes strict regulations on stablecoins, significantly impacting algorithmic stablecoins like FRAX. The Act mandates that stablecoins be fully backed by liquid assets, such as U.S. dollars or Treasury bills, with monthly reserve disclosures. Algorithmic stablecoins, which rely on mechanisms like over-collateralization or algorithms rather than full fiat reserves, are effectively banned due to their perceived risk, as seen with past failures like Terra/Luna. FRAX, however, was designed to comply, maintaining full collateralization. The Act also prohibits interest payments to stablecoin holders, potentially affecting FRAX’s yield mechanisms, though FRAX’s Fraxnet is reportedly compliant
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