The New York financial regulator DFS on Wednesday published regulatory guidelines for stablecoins pegged to the US dollar and issued by companies regulated by the DFS. According to a statement from DFS, it is the first regulatory authority in the United States to impose such requirements on a stablecoin issuer.
The requirements in the Guidelines specify, for example, repurchases, reserves and certificates. It states that a stablecoin must be fully backed by reserves at the end of each business day and the issuer must have a buyback procedure that has been approved in writing by DFS in advance. This gives stablecoin owners the right to exchange the stablecoin for US dollars.
In addition, the issuer’s reserves must be separate from its own assets and consist of US government bonds or deposits with state or federal institutions. The reserves are to be checked monthly by an auditor.
These guidelines apply only to issuers regulated by the DFS and to holders of limited-purpose trust agreements operating in this state. Currently, these are the Paxos Trust Company, issuer of the Pax Dollar (USDP) and Binance USD (BUSD); Gemini Trust Company, issuer of the Gemini Dollar (GUSD); and GMO-Z.com Trust Company, issuer of the Zytara Dollar (ZUSD). The guidelines do not apply to other stablecoins that can be listed by the DFS regulated companies.
The so-called New York BitLicense is notoriously hard to come by and has been criticized by New York City Mayor Eric Adams. Some crypto companies moved to other US states when it was launched in 2015. DFS plans to significantly expand its virtual currency team this year to “eliminate delays in regulatory processes and ensure operational excellence throughout the virtual currency department”.
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