The New York State Department of Financial Services (DFS) has proposed a new regulation aimed at updating and strengthening its stablecoin oversight framework in line with federal requirements established under the GENIUS Act.
According to the announcement made by Acting Superintendent Kaitlin Asrow on June 9, the proposal builds upon New York’s pioneering stablecoin guidance introduced in June 2022 and seeks to ensure that state-regulated stablecoin issuers remain fully compliant with evolving federal standards.
New York expands existing stablecoin framework
According to DFS, the proposed regulation preserves the core requirements already imposed on New York-regulated stablecoin issuers, including full backing, redemption rights, reserve management standards, and independent audits.
The proposal also introduces additional safeguards intended to match new federal expectations under the GENIUS Act.
“The rules and expectations that we have in New York for virtual currency companies have protected New Yorkers and facilitated a stable market,” Acting Superintendent Kaitlin Asrow said.
She added that the new proposal would ensure New York’s regime remains fully aligned with federal standards while continuing to protect consumers and support responsible innovation.
New requirements target operational and custody risks
Under the proposed rules, stablecoin issuers would be required to implement comprehensive risk-management frameworks covering internal controls, cybersecurity and information security measures, audit and compliance procedures, asset growth oversight, earnings management, transactions involving insiders and affiliates, and relationships with third-party service providers.
The proposal also introduces limits on the amount of reserves that may be held with any single custodian, a measure aimed at reducing concentration risk.
DFS said these additions reflect new federal requirements expected under the Treasury Department’s implementation of the GENIUS Act.
Federal stablecoin rulebook continues to take shape
The proposal arrives as federal regulators continue rolling out detailed implementation rules under the GENIUS Act.
Earlier this year, an analysis of the legislation highlighted that multiple federal agencies had begun issuing proposed regulations covering issuer supervision, reserve requirements, operational standards, and consumer protections as part of the broader stablecoin framework.
The GENIUS Act established the first comprehensive federal regulatory structure for payment stablecoins, while allowing certified state frameworks such as New York’s to continue operating alongside federal oversight.
The latest DFS proposal represents one of the clearest examples yet of state regulators adapting their existing frameworks to fit within the new federal system.
Industry support mixed as DeFi concerns persist
While much of the crypto industry has welcomed regulatory clarity around stablecoins, some market participants continue to raise concerns about portions of the GENIUS Act.
Earlier this year, venture capital firm Paradigm and decentralized trading platform Hyperliquid warned that certain provisions could create unintended consequences for decentralized finance applications and innovation.
Although both organizations broadly supported the legislation’s goal of establishing clear stablecoin rules, they argued that some sections may impose overly restrictive compliance burdens or create uncertainty for decentralized protocols operating alongside stablecoin infrastructure.
Those concerns reflect an ongoing debate over how regulators can balance financial stability and consumer protection without stifling innovation within the digital asset sector.
Comment period now open
DFS said the proposal will undergo a 10-day preproposal comment period followed by a 60-day formal public consultation process.
The agency noted that feedback from industry participants, consumer advocates, lawmakers, and other stakeholders will be reviewed before finalizing the regulation.
If adopted, the final rule would take effect alongside the GENIUS Act, while existing New York-licensed stablecoin issuers would receive a one-year transition period to comply with the updated framework.
As federal and state regulators continue refining stablecoin oversight, the New York proposal underscores how rapidly the regulatory landscape is evolving following passage of America’s first dedicated stablecoin law.
Also read: Japanese Megabanks MUFG, Mizuho, and SMBC Unite for 2027 Stablecoin Launch
