Key facts
- New York's Department of Financial Services (NYDFS) proposed new regulations for authorized payment stablecoin issuers.
- The proposed rule aligns with the federal GENIUS Act and aims to meet Treasury's 'substantially similar' certification standard.
- Key requirements include one-to-one U.S. dollar backing, redeemability, and permissible reserve assets.
- New provisions mandate reserve diversification across custodians and establish risk management programs.
- Issuers with over $25 billion in outstanding stablecoins must hold at least 0.5% of reserves in insured deposits, capped at $500 million.
- Redemptions must be processed within two business days, and rehypothecation of reserves is largely prohibited.
New York's Department of Financial Services (NYDFS) has proposed a new regulatory package for authorized payment stablecoin issuers, updating its 2022 framework to align with the federal GENIUS Act. The rule maintains existing requirements such as one-to-one U.S. dollar backing, redemption standards, and independent audits.
The updated proposal incorporates new federal guidelines, including diversified reserve assets across multiple custodians with concentration limits, and mandates robust risk management programs covering internal controls, information security, and service provider oversight. Issuers will face a dual-certification layer for reserve reporting, requiring monthly sign-off from their CEO and CFO, alongside an annual attestation from a registered public accounting firm.
For stablecoin issuers with outstanding values exceeding $25 billion, an additional requirement mandates holding at least 0.5% of reserves, capped at $500 million, in insured deposits. The rule clarifies redemption timelines, setting a two-business-day outer limit for fulfilling holder requests, with limited exceptions. It stipulates that an issuer must begin winding down operations if it remains below its minimum reserve requirement for 15 consecutive business days.
Prohibitions have been expanded to explicitly bar the rehypothecation of reserve assets, except under narrow circumstances approved by the superintendent. Misleading marketing, misrepresentation of insured status, and paying interest on stablecoins are also prohibited, consistent with federal guidelines. This proposal is intended to meet the Treasury's 'substantially similar' certification threshold, allowing New York to retain oversight of stablecoin issuers with less than $10 billion in outstanding issuance value.