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New York DFS Rolls Out New Regulations for Dollar-Pegged Stablecoins

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The New York City Department of Financial Services (DFS) has released a new set of guidelines for regulated BitLicense-enabled cryptocurrency firms that issue USD-backed stablecoins.

Stablecoin Rules for BitLicense Companies

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According to the New York regulator, the new rules published on Wednesday (June 8, 2022) seek to highlight certain requirements that apply to dollar-pegged stablecoins issued by DFS-regulated entities. The guidance focuses on security and redemption, reserve requirements and independent audits.

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DFS stated that in order to be secured and redeemable, stablecoins must be backed by a reserve of assets. In addition, the issuer must have a clear redemption policy approved by the New York Supervisory Authority and must separate the assets in the reserve from its own assets.

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Reserve assets must consist of repurchaseable U.S. Treasury bills fully collateralized by such notes, bills, or bonds.

In addition, the assets in the reserve “must be held by state or federal depository institutions and/or asset custodians.” The guidelines also stipulate that the reserves must be reviewed monthly by a licensed independent U.S. Certified Public Accountant (CPA).


Meanwhile, the DFS notes that the rules do not limit the powers of the regulator. An excerpt from the manual reads:

“DFS may, at any time and in its sole discretion, prohibit or otherwise restrict the issuance or use of a stablecoin before or after a DFS-regulated issuer commences issuing a stablecoin, and may require any such issuer to delist, stop, or otherwise limited or curtailed activity on any stablecoin in a manner.”

According to New York State DFS Superintendent Adrienne A. Harris:

“Using our years of experience in the field, our regulatory guidance is today creating clear criteria for virtual currency companies that want to issue USD-backed stablecoins in New York.”

Other countries are interested in the stablecoin framework

Regulators in various jurisdictions, especially in the US, are working to regulate the stablecoin market. But the need for a regulatory framework for stablecoins seems to have intensified since the collapse of Terra (LUNA) and UST.

The UK government has recently proposed some amendments to existing regulations that will reduce the risks associated with failed stablecoin projects. SEC Commissioner Hester Pierce also noted that guidance on stablecoins could be accelerated.

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