DFS anticipates that stablecoins will be fully backed by a Reserve of assets.
On June 8, the New York State Department of Financial Services (DFS) shared new legislations for crypto-related organizations that issue US dollar-backed stablecoins.
As stated in the official announcement, this is the first time that stablecoin issuers must meet strict requirements in the US. DFS Superintendent Adrienne A. Harris stated:
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“Since DFS approved the first USD-backed stablecoins for issuance in New York in 2018, our regulated entities have had to meet conservative reserve requirements and provide routine attestations to protect consumers and ensure the stability of the coins issued.”
Harris also mentioned that such DFS Regulatory Guidance provides various digital asset businesses with transparent requirements of how to properly issue USD-backed stablecoins in NY state. The regulator indicates that “the stablecoin must be fully backed by a Reserve of assets.”
On top of that, “the assets in the Reserve must be segregated from the proprietary assets of the issuing entity”, whereas issuers must provide audits and be examined by an independent CPA once a month.
The new rules affect only DFS-regulated entities and limited purpose trust charter holders located in New York. Such issuers include the USDP and BUSD, issued by a NY-based financial institution Paxos Trust Company, the GUSD, issued by a crypto exchange Gemini Trust Company, and the ZUSD, issued by a NY state limited purpose trust company dubbed GMO-Z.com Trust Company.
Moreover, one of the areas that New York authorities have been regularly monitoring in recent months is stablecoins, as such digital assets simply lack transparency in the trading process.
On another note, earlier in June, NY Attorney General Letitia James issued a statement suggesting that traders should avoid investing in cryptocurrencies as the market is still in turmoil.
