The proposed regulation would add provisions to ensure alignment with the U.S. Treasury Department’s proposed requirements for state frameworks to be certified under the GENIUS Act, DFS said in a Tuesday (June 9) press release.
“The rules and expectations that we have in New York for virtual currency companies have protected New Yorkers and facilitated a stable market,” DFS Acting Superintendent Kaitlin Asrow said in the release. “The GENIUS Act’s provisions mirror DFS’s stablecoin framework, and this proposal will ensure that the department’s regulatory regime is in full alignment with new federal requirements while maintaining our standard for protecting consumers and fostering responsible innovation.”
The proposed regulation includes DFS’s prior requirements for stablecoins backed by the U.S. dollar that are issued under the department’s oversight, while also addressing new federal provisions such as setting maximum amounts of reserves that can be held at any one custodian and requiring entities to adopt specified risk management programs, according to the release.
A 10-day preproposal comment period on the proposed regulation began Tuesday, and a 60-day comment period will begin when the proposed regulation is published in the state register.
The final regulation will take effect when the GENIUS Act becomes effective, and there will be a one-year transition period for issuers that are already licensed by New York. DFS’s Stablecoin Regulatory Guidance remains in effect until the final regulation is applicable, per the release.
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When the GENIUS Act was signed into law by President Donald Trump in July, PYMNTS reported that the event marked the country’s first-ever piece of cryptocurrency legislation.
The law gives stablecoins legal legitimacy, so long as they play by traditional financial rules of 1:1 reserve backing, anti-money laundering (AML) compliance, and dual charter options through state or federal regulators.
The Treasury Department proposed its first regulation to implement the GENIUS Act on April 1, saying it would establish principles for determining whether a state-level regulatory regime is substantially similar to the federal framework established under the act.