New York’s financial watchdog has proposed updates to its stablecoin regulations in anticipation of the federal GENIUS Act, which will overhaul how payment stablecoins are overseen nationwide. The New York State Department of Financial Services aims to align its framework with the forthcoming law while maintaining its existing consumer protections.
The proposed rule retains key requirements for reserve backing, redeemability, permissible assets, and independent audits. It adds new provisions, including limits on reserves held with a single custodian and mandatory risk management programs covering internal controls, information security, and asset growth. These changes ensure consistency with the GENIUS Act, which creates a dual-track oversight system: issuers with over $10 billion in stablecoins face direct federal regulation, while smaller issuers can remain under state oversight if state rules are certified as substantially similar.
Acting Superintendent Kaitlin Asrow emphasized that New York’s established rules have protected consumers and fostered market stability. The GENIUS Act mirrors much of DFS’s stablecoin framework, which was formalized in 2022. The new rule will help the state maintain its high standards while adapting to federal requirements. Under the GENIUS Act, stablecoins must be 1:1 backed by high-quality liquid assets, issuers cannot offer yield, and users have priority claims in bankruptcy.
DFS is positioning New York for certification by the Stablecoin Certification Review Committee, which includes Treasury, Federal Reserve, and FDIC representatives. Certification would allow eligible issuers to remain under state supervision. The department recently signed an agreement with the European Banking Authority to enhance cross-border stablecoin oversight.
A 10-day preproposal comment period begins now, followed by a 60-day public comment period once published in the State Register. The final regulation will take effect when the GENIUS Act becomes law on January 18, 2027. Existing New York-licensed issuers will have one year to comply, and current guidance remains in force until then.