NYDFS proposes stablecoin rule aligned with GENIUS Act

New York’s Department of Financial Services on Tuesday proposed a rule titled ‘Authorized Payment Stablecoin Issuers' to align the state’s stablecoin framework with the federal GENIUS Act. Acting Superintendent Kaitlin Asrow introduced the text as a package that retains existing state standards while incorporating federal implementing safeguards.

The proposal preserves New York’s core requirements from the 2022 guidance: one-to-one U.S. dollar backing, redeemability standards, permitted reserve assets and independent audit obligations.

Key changes require reserve assets to be spread across multiple custodians and impose limits on the share any single custodian may hold. The rule adds enterprise risk management mandates. Licensed issuers must maintain programs for internal controls, information security, internal audit, monitoring asset growth and earnings, oversight of insider and affiliate transactions, and supervision of service providers.

A dual-certification regime is proposed for reserve reporting. Each month the chief executive and chief financial officer of a licensed issuer must certify the accuracy of the reserve composition report. A registered public accounting firm must provide an annual attestation on the effectiveness of internal controls related to reserve compliance. Issuers with at least $25 billion in outstanding stablecoins must hold a minimum amount of reserves in insured deposits equal to 0.5% of outstanding value, capped at $500 million.

On redemptions, the rule sets a two-business-day outer limit for timely redemption after a holder’s request. Only the OCC, the Federal Reserve or the NYDFS superintendent could impose discretionary limits on that timeline. The proposal requires issuers that fail to meet minimum reserve requirements for 15 consecutive business days to begin a wind-down, liquidating reserves and redeeming outstanding coins at no charge to customers.

The draft expands prohibitions. Rehypothecation of reserve assets is barred except in narrow circumstances approved by the superintendent. The rule also forbids tying arrangements, misleading marketing, misrepresenting insured status, and payment of interest on stablecoins.

The proposal is designed to meet the Treasury Department’s ‘substantially similar' test, the standard that determines whether a state regime can retain oversight of issuers with less than $10 billion in outstanding stablecoins. A 10-day pre-proposal comment window opened June 9; a 60-day formal comment period will begin after the rule appears in the State Register. The department says the 2022 guidance will remain in effect until the federal rule under the GENIUS Act takes effect. The final state rule would take effect the same day the federal law becomes operative, with a one-year compliance period for issuers already licensed under New York’s regime.