TLDR
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DFS in New York has proposed a rule to align its stablecoin system with the GENIUS Act framework.
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The draft maintains 1:1 standby support, redemption rights and auditing standards for licensed issuers.
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Issuers must limit the exposure of reserves to a single custodian and strengthen internal risk controls.
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The GENIUS Act establishes federal oversight of issuers with trading volume greater than $10 billion.
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Small exporters may remain under state supervision if regulators ratify the state’s rules.
New York regulators have moved to align the state’s stablecoin oversight with upcoming federal law. The Financial Services Administration proposed a rule that would incorporate the federal standards while maintaining their framework. The agency said the changes would keep state oversight consistent with The law of genius.
The proposal aligns state rules with GENIUS Act standards
The Department of Financial Services has released a draft rule for public review. The proposal maintains existing reserve, recovery and audit requirements for licensed issuers. It also adds new controls that reflect federal expectations under the GENIUS Act.
under draftIssuers must maintain a 1:1 backing with high-quality liquid assets. They must also limit reserve exposure to a single custodian. The rule provides for risk management programs covering internal controls and information security. It requires oversight of internal and affiliate transactions. It also sets standards for asset growth and earnings monitoring.
Acting Superintendent Caitlin Asro said the framework protects residents and supports market stability. “The provisions of the GENIUS Act reflect the established DFS framework,” it stated. She added that the proposal ensures full compliance with federal requirements while maintaining consumer protection.
The GENIUS Act created a dual system for Supervising stablecoins. Issuers with a turnover of more than $10 billion would be subject to direct federal oversight. Small exporters may remain under state supervision if regulators ratify their rules.
Federal lawmakers have drafted several provisions in accordance with New York’s 2022 Stablecoin Guidance. Federal law prohibits issuers from offering yield to holders. It also gives stablecoin users priority rights to payment in the event of bankruptcy.
Certification path and implementation timeline
New York is seeking certification under the federal framework established by the GENIUS Act. The certification will allow eligible exporters to continue operating under state supervision. The Stablecoin Certification Review Committee will handle the approval process.
The committee will include representatives of US TreasuryThe Federal Reserve and the Federal Deposit Insurance Corporation. Federal agencies must issue implementation rules by July 2026. State regulators are updating their systems before that deadline.
DFS said it has overseen the issuance of stablecoins since 2018. The agency applies standards covering reserve backing and redemption rights. It also imposes transparency requirements and restricts the remortgaging of reserve assets.
Earlier this month, DFS signed a memorandum of understanding with the European Banking Authority. The agreement supports the exchange of information and supervisory cooperation. It focuses on stablecoin activity across jurisdictions.
The department immediately opened a 10-day advance comment period. After publication in the state registry, organizers will allow 60 days for public comment. Officials will review comments before adopting the final rule.
DFS said the regulation will come into effect on January 18, 2027. Existing licensees will have a one-year transition period to comply. The current stablecoin guidelines will remain in place until the new regulation becomes applicable.
