NYDFS Moves to Match Federal GENIUS Act With New Stablecoin Rules

The New York State Department of Financial Services on June 9 proposed stablecoin rules designed to bring the state’s existing framework in line with the federal GENIUS Act.

The proposal keeps the core standards from the 2022 guidance: one-to-one dollar backing, redemption at par on demand, defined categories of permissible reserve assets, and independent audits confirming reserve adequacy. It also adds requirements the GENIUS Act demands for state regimes seeking federal recognition.

Acting NYDFS Superintendent Kaitlin Asrow said the rules protected New Yorkers and facilitated a stable market. “The GENIUS Act’s provisions mirror the NYDFS’s stablecoin framework,” she said, “and this proposal will ensure that the Department’s regulatory regime is in full alignment with new federal requirements while maintaining our standard for protecting consumers and fostering responsible innovation.”

A preproposal comment window opened with the announcement. A 60-day formal comment period will start once the rule appears in the State Register.

The NYDFS wants the final regulation to take effect at the same time the GENIUS Act becomes operative. Existing New York-licensed issuers will receive a one-year transition. The 2022 guidance remains in force until the new rule applies.

The GENIUS Act, signed by President Trump in 2025, allows stablecoin issuers with $10 billion or less in outstanding supply to operate under state regulation rather than federal oversight. The Treasury Department must certify the state regime as substantially similar to federal standards for that option to apply.

The proposal introduces caps on how much reserve backing can sit at any single custodian. Licensed issuers must also maintain formal risk management programs covering internal controls, information security, audit systems, and service provider arrangements, the DFS said.

The cross-border context reinforces the alignment push. On June 2, the NYDFS signed a memorandum of understanding with the European Banking Authority under the EU’s Markets in Crypto-Assets Regulation. That agreement establishes procedures for information exchange and coordinated oversight of stablecoin issuers active in both jurisdictions.

Domestically, the Federal Deposit Insurance Corporation published its own GENIUS Act rulemaking notice earlier this year. The Bank Policy Institute, The Clearing House, and the Consumer Bankers Association submitted a joint comment letter focused on tokenized deposit provisions. The National Community Reinvestment Coalition, through its policy director Tara Flynn, called on the FDIC to address deposit flight risk for families, small businesses, and marginalized neighborhoods.

Banking groups have also asked the Treasury Department to set the certification bar high enough to prevent a regulatory race to bottom among states.

New York has continued granting new licenses under the BitLicense regime. eToro, for example, secured authorization to list 20 tokens in New York after a multi-year process to operationalize its 2023 BitLicense.

For stablecoin issuers already operating under the NYDFS – Circle, Paxos, Gemini – the core reserve rules are familiar. The new custodian concentration limits and formal risk management programs will require adjustments. The one-year transition gives them time to comply.

The comment period will run through roughly August, with the final rule expected to become effective when the GENIUS Act takes effect. No date has been set for that federal trigger.