TL;DR:
- The NYDFS proposed a formal stablecoin regulation to align its state framework with the federal GENIUS Act, enacted last year.
- The new rule introduces reserve concentration limits per custodian, monthly CEO and CFO certification, and redemption within a maximum of two business days.
- Issuers with more than $25 billion in stablecoins outstanding must hold at least 0.5% of their reserves in insured deposits, capped at $500 million.
The New York Department of Financial Services (NYDFS) published a formal regulatory proposal for its licensed payment stablecoin issuers. The goal is to align its state framework with the requirements of the GENIUS Act, the federal law enacted last year. Kaitlin Asrow, the agency’s acting superintendent, announced the initiative on Tuesday.
The proposal, titled “Authorized Payment Stablecoin Issuers“, preserves the pillars of the original framework: one-to-one dollar backing, redemption standards, permitted reserve assets, and independent audits. The most significant additions replicate the implementation rules that the Treasury Department, the OCC, and the FDIC have proposed since the GENIUS Act was passed.
New Requirements for Local Stablecoin Issuers
Among the most concrete changes, the rule establishes that reserves must be diversified across custodians, setting maximum concentration limits for any individual institution. Additionally, each month the CEO and CFO of the issuer must certify the accuracy of the reserve composition report, and an annual attestation from a registered public accounting firm on the effectiveness of internal controls is required.
For issuers that exceed $25 billion in stablecoins outstanding, the framework imposes an additional floor: maintaining at least 0.5% of reserves, capped at $500 million, in insured deposits at a depository institution that is duly licensed.
The text also sets a maximum deadline of two business days to process redemption requests. If an issuer remains below the reserve minimum for 15 consecutive business days, it must initiate a liquidation process and redeem outstanding coins at no cost to users.
The State Framework Against Federal Oversight
The proposal is explicitly designed to meet the Treasury’s “substantially similar” certification threshold. That standard determines whether a state regime can retain supervision of issuers with less than $10 billion in circulation, rather than ceding it to federal regulators.
A 10-day pre-comment period opened on June 9, followed by 60 formal days after publication in the State Register. Current NYDFS licensees, which include some of the largest issuers of digital dollars in the market, have until the close of that period to submit comments before the rule is finalized.
