New York’s Department of Financial Services (DFS) announced a proposed regulation designed to align its stablecoin oversight with new federal requirements under the GENIUS Act. The move seeks to harmonize state and federal rules, reinforcing protections for consumers while supporting innovation in digital currency markets.
The proposed rules build on DFS’s existing stablecoin framework, which mandates U.S. dollar backing for stablecoins issued under its supervision. In addition to these provisions, the new regulation incorporates federal directives such as placing limits on reserve amounts held by any single custodian and requiring comprehensive risk management protocols for stablecoin issuers. This reflects the U.S. Treasury Department’s recent initiative to certify state regulatory regimes for consistency with the GENIUS Act.
DFS has opened a short pre-proposal comment period, followed by a more extensive 60-day public consultation once the regulation appears in the state register. The final rule will take effect simultaneously with the GENIUS Act’s implementation, accompanied by a one-year transition timeframe for already licensed stablecoin issuers in New York. Until then, the department’s existing Stablecoin Regulatory Guidance remains operational.
The GENIUS Act, signed into law federally in mid-2020, represents the nation’s first comprehensive cryptocurrency legislation. It grants legal recognition to stablecoins that comply with traditional financial safeguards, including a 1:1 reserve backing, anti-money laundering (AML) standards, and the option to operate under either state or federal charters. The Treasury Department’s April proposal sets forth standards for evaluating whether state frameworks align substantially with this federal model.