New York Seeks Stablecoin Certification Under GENIUS Act

TLDR

• New York updates stablecoin rules to qualify under GENIUS Act oversight
• DFS proposal keeps eligible stablecoin issuers under state supervision
• New stablecoin regulation adds custody limits and risk controls
• New York moves to align stablecoin framework with federal standards
• GENIUS Act certification could preserve New York stablecoin authority

New York is moving to secure state-level stablecoin oversight under the GENIUS Act through a proposed DFS regulation. The rule would align New York’s framework with federal standards while keeping qualified issuers under state supervision. It also preserves key controls on reserves, redemptions, audits, and risk management.

New York Aligns Stablecoin Rules With GENIUS Act

The New York State Department of Financial Services proposed the regulation under Acting Superintendent Kaitlin Asrow. The proposal builds on DFS guidance issued in June 2022 for dollar-backed stablecoin issuers. It also responds to federal certification rules created under the GENIUS Act.

The draft rule keeps New York’s existing standards for reserve backing, redeemability, and permissible assets. It also maintains independent audit requirements for issuers licensed by DFS. These rules already form the base of New York’s stablecoin supervision model.

However, DFS added new provisions to match federal expectations. The proposal would limit reserve exposure to any single custodian. It would also require formal risk management programs across core business operations.

DFS Seeks Federal Certification For State Oversight

New York wants its framework certified as substantially similar to federal stablecoin standards. Certification would allow eligible issuers to remain under DFS supervision. Without certification, some issuers could face direct federal oversight.

The GENIUS Act created a dual-track model for stablecoin regulation. Larger issuers with more than $10 billion in outstanding tokens fall under federal supervision. Smaller issuers may operate under state regimes if federal officials certify those rules.

A Stablecoin Certification Review Committee will assess state frameworks under the law. The committee includes representatives from the Treasury Department, Federal Reserve, and FDIC. Therefore, New York must show that its rules match federal standards.

Proposal Adds Custody And Risk Controls

The proposed regulation expands oversight beyond backing and redemption standards. Issuers would need controls covering internal governance, information security, and internal audits. They would also need risk programs for asset growth, earnings, and service providers.

The draft rule also addresses insider transactions and affiliate dealings. DFS said these measures support stronger oversight as stablecoin activity grows. The department also said its framework relies on data, supervision, and market engagement.

DFS has supervised stablecoin issuance since 2018. Its existing framework includes reserve rules, redemption rights, transparency duties, and rehypothecation limits. The new proposal would update that structure for the federal GENIUS Act framework.

Rulemaking Opens Before 2027 Effective Date

The proposal starts with a 10-day preproposal comment period. After publication in the State Register, DFS will open a 60-day public comment period. Regulators will then review feedback before finalizing the rule.

DFS said the final regulation will take effect with the GENIUS Act on January 18, 2027. Existing New York-licensed issuers would receive a one-year transition period. Until then, DFS’s current stablecoin guidance will remain in force.

The proposal follows broader cooperation between DFS and other regulators. Earlier this month, DFS signed an agreement with the European Banking Authority on supervisory cooperation. That move showed New York’s push to maintain a central role in stablecoin oversight.

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