New York financial regulators have moved to update the state’s stablecoin rules as the federal government prepares to implement the GENIUS Act, a law that will reshape how payment stablecoins are supervised across the United States.
Summary
- New York DFS has proposed new stablecoin rules to align its framework with federal requirements under the GENIUS Act.
- The proposal adds reserve custody limits and risk management requirements while retaining existing standards for backing, redemption, and audits.
- Existing New York-licensed stablecoin issuers would receive a one-year transition period when the GENIUS Act takes effect in January 2027.
The New York State Department of Financial Services said it has proposed a new regulation that incorporates federal requirements while preserving the state’s existing oversight framework for dollar-backed stablecoins issued under its supervision.
Source: DFS website.
Under the proposal, New York-licensed issuers would continue to follow requirements covering reserve backing, redeemability standards, permissible reserve assets, and independent audits.
The draft rule also introduces new provisions tied to federal expectations, including limits on the amount of reserves held with a single custodian and mandatory risk management programs covering internal controls, information security, internal audits, asset growth, earnings, insider transactions, affiliate dealings, and service provider relationships.
According to DFS, the proposal is designed to ensure the state’s regulatory regime remains consistent with the GENIUS Act, which created a dual-track system for stablecoin oversight.
Under that framework, issuers with more than $10 billion in outstanding stablecoins fall under direct federal supervision, while smaller issuers may continue operating under state oversight if their state’s rules are certified as substantially similar to federal standards.
“The rules and expectations that we have in New York for virtual currency companies have protected New Yorkers and facilitated a stable market,” said Acting Superintendent Kaitlin Asrow.
“The GENIUS Act’s provisions mirror DFS’s stablecoin framework, and this proposal will ensure that the Department’s regulatory regime is in full alignment with new federal requirements while maintaining our standard for protecting consumers and fostering responsible innovation.”
Federal lawmakers modeled several parts of the GENIUS Act on New York’s existing stablecoin framework, which DFS first formalized through guidance issued in June 2022. The federal law requires stablecoins to maintain 1:1 backing with high-quality liquid assets and prohibits issuers from offering yield to holders. It also grants stablecoin users priority repayment rights if an issuer enters bankruptcy.
New York seeks certification under federal framework
As federal agencies prepare implementing rules due by July 2026, state regulators are positioning their frameworks to meet certification requirements established under the GENIUS Act.
For New York, certification would allow eligible issuers to remain under DFS supervision rather than moving into a federal regime. The certification process will be handled by a Stablecoin Certification Review Committee composed of representatives from the U.S. Treasury Department, Federal Reserve, and Federal Deposit Insurance Corporation.
Recent actions by the department suggest a continued focus on expanding its role in stablecoin oversight. Earlier this month, DFS signed a memorandum of understanding with the European Banking Authority to facilitate information sharing and supervisory cooperation related to stablecoin activity across jurisdictions.
DFS said it has supervised stablecoin issuance since 2018 and currently applies standards covering reserve requirements, redemption rights, transparency obligations, and restrictions on rehypothecation.
A 10-day preproposal comment period begins immediately under the new rulemaking process. Once the proposal is published in the State Register, it will enter a 60-day public comment period before regulators consider revisions.
The department said the final regulation will become effective when the GENIUS Act takes effect on Jan. 18, 2027. Existing New York-licensed issuers would receive a one-year transition period to comply with the updated requirements, while the department’s current stablecoin guidance will remain in force until the new regulation becomes applicable.
