The New York State Department of Financial Services (NYDFS) on June 9 proposed new stablecoin regulations designed to bring the state’s existing framework into alignment with the federal GENIUS Act.
The proposal preserves every dollar-backed stablecoin standard of the NYDFS that was established in its June 2022 guidance. It also touched on the provisions the GENIUS Act requires for state regimes seeking federal recognition.
This is coming a week after the agency signed a cross-border supervision agreement with the European Banking Authority.
Which parts of the NYDFS guidance will change under the GENIUS Act?
The one-to-one dollar backing for every stablecoin issued under NYDFS oversight, which is a provision that was made under the 2022 guidance, is still intact. Also, redemption at par on demand, defined categories of permissible reserve assets, and mandatory independent audits confirming reserve adequacy are untouched in the latest proposal.
Two requirements address the gaps opened by the GENIUS Act.
- The first requirement is a cap on how much reserve backing any single custodian can hold. This is a measure that aims to reduce the concentration risk that could occur if one custodian fails.
- The second requirement set by New York’s financial regulator is that licensed issuers adopt formal risk management programs covering internal controls, information security, audit systems, asset growth oversight, earnings management, insider and affiliate transactions, and service provider arrangements.
Acting NYDFS Superintendent Kaitlin Asrow said, “The rules and expectations that we have in New York for virtual currency companies have protected New Yorkers and facilitated a stable market.”
Ascrow added, “The GENIUS Act’s provisions mirror the NYDFS’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.”
A preproposal window for comment is currently open upon the announcement, and a 60-day formal comment period will follow once the rule is published in the State Register.
Regulators coordinate on stablecoin expansion wave
The NYDFS signed a memorandum of understanding on June 2 with the European Banking Authority (EBA) under the EU’s Markets in Crypto-Assets Regulation.
This established procedures for information exchange and coordinated oversight of entities issuing stablecoins across both jurisdictions, according to the EBA.
On the domestic front, the Federal Deposit Insurance Corporation (FDIC) published its own notice of proposed rulemaking on GENIUS Act implementation earlier this year.
The Bank Policy Institute, The Clearing House, and the Consumer Bankers Association submitted a joint comment letter that focused on tokenized deposit provisions in the FDIC proposal on the same day that the NYDFS announced its proposal.
The National Community Reinvestment Coalition (NCRC), through its policy director Tara Flynn, made a case for families, small businesses, and marginalized neighborhoods, calling on the FDIC to address deposit flight risk.
New York has also continued granting new licenses under its existing BitLicense regime. Cryptopolitan reported in April that eToro received authorization to list 20 tokens in New York after a multi-year process to operationalize its 2023 BitLicense.
The GENIUS Act certification question
The GENIUS Act was signed into law by President Trump in 2025, and part of its provisions includes allowing stablecoin issuers with $10 billion or less in outstanding supply to operate under state regulation. However, this comes with a caveat as the Treasury Department has to certify that the state’s regulation is substantially similar to federal standards.
Banking groups have publicly called upon the Treasury Department to set the bar high enough to prevent a regulatory race to the bottom among states.
The NYDFS wants the final regulation to take effect at the same time the GENIUS Act becomes operative. Existing New York-licensed issuers will receive a one-year transition period. However, the 2022 guidance will remain in force until the new regulation applies.
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