New York's financial regulator issues new guidance on dollar-backed stablecoins

Quick Take

    • The New York Department of Financial Services has issued new compliance requirements for issuers of US dollar-backed stablecoins.
    • The guidance builds on informal policies that have been in place since 2018. 

The New York Department of Financial Services (DFS) today became the first financial regulator in the US to issue guidance outlining compliance requirements for dollar-backed stablecoins.

The guidance builds on informal policies used by the DFS since 2018, setting “baseline requirements” for any stablecoin issuer currently subject to DFS oversight, and any firm that applies to be regulated in the future. It "creates clear criteria for virtual currency companies looking to issue USD-backed stablecoins in New York," according to Adrienne Harris, the state's Superintendent of Financial Services.

The document has three main components. First, any stablecoin regulated by the DFS must be “fully backed” by a reserve of assets, meaning that the market value of a reserve is equal to the nominal value of a stablecoin’s outstanding units at the end of each business day. Issuers also must set clear policies for the redemption of tokens into US dollars, and fulfill redemption requests within two days, except under “extraordinary circumstances.”

Under the guidance, firms that issue USD-backed stablecoins will also need to se