New York state releases guidance for issuing dollar-backed stablecoins

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New York state releases guidance for issuing dollar-backed stablecoins
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The New York State Department of Financial Services (DFS) on Wednesday issued regulatory guidance for dollar-backed stablecoins issued by DFS-regulated entities. According to the DFS statement, it is the first U.S. regulator to impose this expectation on stablecoin issuers.

The requirements in the guidelines relate to callability, reserves and proofs. They noted that stablecoins must be fully backed by reserves at the end of each business day, and that issuers must obtain prior written approval from DFS for a redemption policy that gives holders the right to redeem stablecoins for U.S. dollars.

In addition, the issuer’s reserves must be separate from its proprietary assets and consist of U.S. Treasury bills or deposits with state or federally chartered institutions. Reserves must be checked monthly by a certified public accountant.

Related: Do you have the right to redeem your stablecoin?

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This guidance applies only to DFS-regulated issuers and limited-purpose trust charterholders operating in the state. Currently, they are Paxos Trust Company, issuer of Pax Dollar (USDP) and Binance USD (BUSD); Gemini Trust Company, issuer of Gemini Dollar (GUSD); and GMO-Z.com Trust Company, Zytara Dollar (ZUSD) ‘s issuer. This guidance does not apply to other stablecoins that may be listed by DFS-regulated entities.

New York State’s BitLicense is notoriously difficult to obtain a DFS license and criticized by New York City Mayor Eric Adams. Some crypto companies moved out of the state when they launched in 2015. DFS intends to triple the size of its virtual currency team this year as part of its plan to “address regulatory process delays and ensure operational excellence across the virtual currency sector.” “



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