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NYDFS releases stablecoin guidance

State Issues Agency Rule-Making & Guidance Digital Assets State Regulators NYDFS Stablecoins

State Issues

On June 8, NYDFS released new regulatory guidance on the issuance of U.S. dollar-backed stablecoins, establishing criteria for regulated virtual currency companies seeking to issue stablecoins in the state. The guidance outlines baseline criteria for USD-backed stablecoins, including that: (i) a “stablecoin must be fully backed by a Reserve of assets,” such that the Reserve’s market value “is at least equal to the nominal value of all outstanding units of the stablecoin as of the end of each business day”; (ii) stablecoin issuers “must adopt clear, conspicuous redemption policies, approved in advance by [NYDFS] in writing, that confer on any lawful holder of the stablecoin a right to redeem units of the stablecoin from the Issuer in a timely fashion at par for the U.S. dollar”; (iii) Reserve assets must be segregated from an issuer’s proprietary assets and “held in custody with U.S. state or federally chartered depository institutions and/or asset custodians”; (iv) a Reserve must consist of specific assets subject to NYDFS-approved overcollateralization requirements and restrictions; and (v) a Reserve must undergo an examination of its management’s assertions at least once a month by a licensed certified public accountant.

NYDFS emphasized that these criteria are not the only requirements it may impose when issuing stablecoins, and informed regulated entities that it will also consider a range of potential risks prior to granting a regulated entity authorization to issue stablecoins. This includes risk related to “cybersecurity and information technology; network design and maintenance and related technology and operational considerations; Bank Secrecy Act/anti-money-laundering [] and sanctions compliance; consumer protection; safety and soundness of the issuing entity; and the stability/integrity of the payment system, as applicable.” Additional requirements may be imposed on regulated entities to address any of these risks.

NYDFS noted that the regulatory guidance is not applicable to USD-backed stablecoins listed, but not issued, by regulated entities, and stated it “does expect regulated entities that list USD-backed stablecoins to consider this guidance when submitting a request for coin issuance or seeking approval for a coin self-certification policy.”

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