New York State Issues Guidelines for Issuing Dollar-Backed Stablecoins

On Wednesday, June 8th, the New York State Department of Financial Services (DFS) issued regulatory guidance on issuing dollar-backed stable coins. According to a statement from DFS, it is the first U.S. regulator to implement such guidelines for stablecoin issuers.

The requirements in the guidelines relate to redeemability, reserve, and certification. DFS notes that stablecoins must be fully backed by reserves at the end of each business day, and issuers must have a redemption policy approved in writing by DFS in advance, giving holders the right to redeem the stablecoins for US dollars.

Additionally, the issuer’s reserves must be separate from their proprietary assets and consist of the US Treasury bills or deposits with state or federal agencies, and the reserves must be reviewed monthly by statutory auditors.

This guidance applies only to DFS-regulated issuers and limited-purpose trust letter holders operating in the state. This guidance does not apply to other stablecoins that may be listed by entities regulated by DFS.

New York state virtual currency business licenses (Bit Licenses) are difficult to obtain. Some cryptocurrency companies pulled out of the state in 2015. This year, DFS aims to triple the size of the local virtual currency team.