New York State Department of Financial Services, a notoriously harsh regulator, claims to be the first in the nation to implement such rules.
The standards outlined in the advice pertain to redeemability, reserves, and certification. They stipulate that a stablecoin must be completely backed by reserves at the end of each business day, and that the issuer must have a redemption policy authorised in advance in writing by the DFS that allows holders to redeem stablecoins for U.S. dollars.
In addition, the issuer's reserves must be kept separate from its proprietary assets and include U.S. Treasury securities or deposits at state or federally authorised financial institutions. A qualified public accountant is required to examine the reserve on a monthly basis.
The guideline applies solely to DFS-regulated issuers and state-based limited purpose trust charter holders. Currently, these entities are the Paxos Trust Company, issuer of the Pax Dollar (USDP) and Binance USD (BUSD), the Gemini Trust Company, issuer of the Gemini Dollar (GUSD), and the GMO-Z.com Trust Company, issuer of the Zytara Dollar (ZUSD). The guideline does not apply to other stablecoins that DFS-regulated firms may offer.
New York City Mayor Eric Adams has criticised the infamously difficult-to-obtain New York state BitLicense, also known as the DFS licence. When it was enacted in 2015, a number of crypto companies left the state. This year, the DFS plans to quadruple the size of its virtual currency staff as part of its plan to
address delays in regulatory processes and ensure operational excellence across the Virtual Currency unit.