Why this stock is Up 477% since its IPO

Circle Internet Group (NYSE:CRCL) went public just a couple of weeks ago on June 4 at a price of $31 per share. Two weeks later, the stock is trading at around $180 per share, which is a 477% gain.

That gain was boosted by another 20% increase on Wednesday.

What’s driving Circle to its meteoric rise? On Wednesday, it was the passage of the GENIUS Act by the U.S. Senate. The GENIUS Act creates a regulatory framework for stablecoins pegged to the U.S. dollar. It is an important piece of legislation that establishes guardrails for U.S.-backed stablecoins while opening the door for companies, including banks and retailers, to launch their own stablecoins.

This matters to Circle as the company is the issuer of USD Coin (USDC), which is a leading US dollar pegged stablecoin. It also issues the Euro Coin stablecoin, pegged to the euro.

In addition, it has a platform, the Circle Payments Network, which facilities the movement of digital assets backed by stablecoins.

“History is being made, as the US Senate passes the GENIUS Act, taking us one step closer to breakthrough legislation being signed into law that will drive US economic and national competitiveness for decades to come,” Circle co-founder and CEO Jeremy Allaire posted on X.

Landmark legislation

U.S. Sen. Kirsten Gillibrand (D-NY), one of the bill’s cosponsors, called the GENIUS Act a “landmark moment” for the crypto industry in the U.S.

“This bill will enable U.S. businesses and consumers to take advantage of the next generation of financial innovation,” said Gillibrand. “A product of months of bipartisan negotiations, the GENIUS Act will protect consumers, enable responsible innovation, and safeguard the dominance of the U.S. dollar.”

While the bill must be passed by the U.S. House to become law, it inched closer with the Senate approval. However, passage in the House probably won’t be so cut and dried, as the House has its own version of the GENIUS Act, the Clarity Act, which also sets a framework for stablecoins. In addition, there is the Stable Act, which would allow stablecoins issued by foreign issuers to be offered in the U.S.

So, it is likely that there will be some reconciliation among these bills. But ultimately, it is likely that some form of a stablecoin regulatory framework will be adopted.

Circle stands to be a primary beneficiary of the growth in U.S. dollar pegged stablecoins as the leading player in the space. But Coinbase (NASDAQ:COIN), the cryptocurrency trading platform, should also benefit. Coinbase stock rose some 15% on Wednesday on the news.

Investors who jumped on the Circle IPO are certainly glad they did and went along for the wild ride. But after such a huge surge, investors should be wary about near-term volatility. In the long run, this is definitely a stock to keep an eye on. It has only been public for a month, so watch for more in upcoming earnings reports.