New York Proposes Bank-Style Rules for Stablecoins

The New York State Department of Financial Services has proposed a bank-style regulatory framework for stablecoin issuers to align the state’s oversight with federal standards set by the GENIUS Act.

The draft would impose limits on reserve holdings and restrict concentration of reserve assets with custodians. It would require issuers to maintain minimum reserve thresholds, trigger liquidation requirements if thresholds are not met for extended periods, and mandate redemption of customer funds within two business days.

The proposal would bar interest-bearing stablecoins. It would also require authorized issuers to hold capital buffers and set operational backstops to preserve continuity during periods of financial or operational stress.

The department would expand oversight of liquidity plans, redemption mechanics and cybersecurity. NYDFS stated stronger safeguards would be required to protect against operational and technology risks.

Acting Superintendent Kaitlin Asrow noted, “The GENIUS Act’s provisions mirror DFS’s stablecoin framework.” NYDFS officials framed the proposal as part of implementing the federal law after its passage.

The draft includes a one-year transition period for existing issuers once the GENIUS Act takes effect. The rules would apply to authorized stablecoin issuers operating under NYDFS supervision.

Several major dollar-backed stablecoins already operate under NYDFS oversight, and the department’s rules often influence other state regulators and market participants. The proposal must complete the department’s rulemaking process before it can take effect and would be coordinated with the federal GENIUS Act timetable.