The New York Department of Financial Services (NYDFS), which is the regulator for crypto firms in the state, has issued its first stablecoin specific guidance on Wednesday. It lists a series of demands that any issuer operating in the state must abide by.
The agency wants stablecoins to be fully backed by a reserve of assets and redeemable by investors. It also listed the requirements for those reserves, including the different assets the reserves should comprise and a specification that they be “segregated from the proprietary assets of the issuing entity.”
Issuers must also submit to monthly audits by an independent certified public accountant.
The idea behind the guidance is to formalize consumer protection as well as institutional soundness too, NYDFS Superintendent Adrienne Harris said in an interview.
Current BitLicense holders, as well as limited purpose trust charterholders who issue stablecoins backed by fiat currency, are affected by the new guidance.
“As we think about stablecoins and this guidance, and this is something we have been working on before the events of last month, really our goal is to accomplish those things for the stablecoin market, the safety and soundness of institutions, stability of the marketplace and consumer protection,” she stated.
For stablecoins, this includes making sure liquidity for redemptions, she said.
As per NYDFS’s guidance, stablecoins, the value of which is intended to be pegged to the U.S. dollar or any other assets, must be backed by a reserve made out of U.S. Treasury bills with not over three months to maturity, U.S. Treasury notes, some types of U.S. Treasury bonds or reverse repurchase agreements that are secured by Treasury bills.
The stablecoin guideline, according to Harris, builds on Volt, a transformation programme she began to resolve regulatory delays in the virtual currency businesses regulated by the agency.
VOLT stands for vision, operations, leadership, and technology, and the effort contains a number of initiatives to address each of these.
This guidance follows the whole Terra fiasco and it is safe to say that the regulators are busy ensuring the safety of the public’s money so that investors do not lose billions of dollars again.
This is not the first time that the regulators have presented their thoughts upon crypto, previously, the NYDFS published a letter asking crypto firms working in the state to use blockchain analytic tools and services.
