Today, the Superintendent of the New York State Department of Financial Services (DFS), Adrienne A. Harris, set basic criteria for USD-backed stablecoins by issuing new DFS Regulatory Guidance. She said that regulated entities have met “conservative reserve requirements” since the first issuance of USD-backed stablecoins was approved by the DFS in 2018.
“Leveraging our years of expertise in the space, our Regulatory Guidance today creates clear criteria for virtual currency companies looking to issue USD-backed stablecoins in New York.”
The new guidance explicitly says that a stable coin must be fully backed by a “reserve of assets,” which means that the reserve should at least be equal to the “nominal value of all outstanding units of the stablecoin as of the end of each business day.”
It is expected that the issuer of the stablecoin must abide by their redemption policies which must be clear and approved in advance by the DFS in writing.
Like the traditional banking system, the DFS wants stablecoin issuers to maintain a reserve. The regulator expects the reserve to be separated from the personal assets of the issuer and is to be held in custody by federally or state-accredited depository institutions (banks) or asset custodians.
The reserve must also consist of U.S. Treasury Bills acquired by the Issuer three months or less from their respective maturities.
DCF says that the reserve will be subject to audit at least once a month by an independent Certified Public Accountant (“CPA”) licensed in the United States. Attestation standards of the American Institute of Certified Public Accountants (“AICPA”) must also be applied to the audit.
The guidance is only limited to stablecoin issuers regulated by the New York DFS. They may be extended to limited purpose trust charter holders in some cases.