backOn June 9, 2026, the New York State Department of Financial Services (“NYDFS” or the “Department”) announced a proposed regulation, Proposed New 23 NYCRR Part 202 (the “Proposed Rule”), creating a comprehensive framework for “Authorized Payment Stablecoin Issuers.” Acting Superintendent Kaitlin Asrow issued the Proposed Rule under the New York Banking Law and Financial Services Law. It restates the Department’s existing rules for payment stablecoins and brings them into line with the federal framework created by the Guiding and Establishing National Innovation for U.S. Stablecoins Act (the “GENIUS Act”), which became law on July 18, 2025.
With this step, New York becomes the first state to formally propose a stablecoin framework built around the GENIUS Act, setting itself up to have its rules certified as “substantially similar” to the federal framework. This alert explains the background and key provisions of the Proposed Rule, points out practical compliance considerations, flags notable open questions, and summarizes the comment periods and effective date.
Background: New York’s Role in the GENIUS Act Framework
New York has regulated U.S. dollar-backed stablecoins since its issuance of the June 8, 2022 Industry Letter, “Guidance on the Issuance of U.S. Dollar-Backed Stablecoins.” That letter was the first stablecoin guidance from any state regulator, setting requirements for reserve backing, redemption, and independent attestations of reserves. Congress modeled several parts of the GENIUS Act on New York’s framework, and NYDFS has long supervised some of the largest dollar-backed stablecoin issuers.
The GENIUS Act created a two-track supervisory system. Larger issuers, meaning those with more than $10 billion in stablecoins outstanding, generally answer to federal regulators, principally the Office of the Comptroller of the Currency (the “OCC”), the Board of Governors of the Federal Reserve System (the “Federal Reserve”), the Federal Deposit Insurance Corporation (the “FDIC”), and the National Credit Union Administration (the “NCUA”). Smaller issuers, known as “State qualified payment stablecoin issuers” and holding $10 billion or less in stablecoins outstanding, may elect state supervision, but only if the U.S. Department of the Treasury (“Treasury”) certifies their state’s rules as “substantially similar” to the federal framework. A state qualified issuer that grows past the $10 billion threshold must transition to the federal framework unless it obtains a waiver to remain solely supervised by its state regulator.
On April 3, 2026, Treasury proposed a rule (the “Treasury Proposed Rule”) describing the principles it will use to decide whether a state regime is “substantially similar” to the federal framework. Treasury’s proposal sorts the requirements into two groups: “uniform requirements,” which must match the federal framework, such as reserve assets, BSA/AML/sanctions programs, and core disclosure and naming rules; and “state-calibrated requirements,” which are areas where a state may set its own standards, as long as the results are at least as strong as the federal model. These include capital and certain governance and risk-management practices. 1See From Money Transmitters to PPSIs: Treasury's Proposed Stablecoin Compliance Framework. Treasury’s proposal sorts the requirements into two groups: “uniform requirements,” which must match the federal framework, such as reserve assets, BSA/AML/sanctions programs, and core disclosure and naming rules; and “state-calibrated requirements,” which are areas where a state may set its own standards, as long as the results are at least as strong as the federal model. These include capital and certain governance and risk-management practices.
The Proposed Rule is designed to keep New York’s regime aligned with these federal requirements. As Acting Superintendent Asrow explained: “The rules and expectations that we have in New York for virtual currency companies have protected New Yorkers and facilitated a stable market. The GENIUS Act’s provisions mirror DFS’s stablecoin framework, and this proposal will ensure that the Department’s regulatory regime is in full alignment with new federal requirements while maintaining our standard for protecting consumers and fostering responsible innovation.”
The Proposed Rule leans heavily on the proposed rules issued by the federal banking regulators. It borrows definitions and substantive requirements from the OCC’s proposed rule implementing the GENIUS Act (the “OCC Proposed Rule”) and ties its own scope to the Treasury Proposed Rule. 2See OCC Issues Interpretive Letter Permitting Banks to Engage in Additional Crypto Activities.
Scope of Eligible Applicants
The Proposed Rule adds a new Part 202 to Title 23 of the NYCRR. An “authorized payment stablecoin issuer” is simply a person the Superintendent has approved to issue one or more payment stablecoins.
Three types of entities may apply: (1) a limited purpose trust company, (2) an applicant for a limited purpose trust company charter, and (3) any other type of entity the Superintendent decides is eligible, consistent with the GENIUS Act and safe and sound operation. As under the GENIUS Act, a public company that is not mainly engaged in financial activities, together with its wholly or majority-owned subsidiaries and affiliates, generally cannot apply, except as allowed under Section 4(a)(12) of the GENIUS Act.
Applicants must use the form of application the Superintendent prescribes and must show, among other things, that the applicant can financially meet the Part’s requirements; that none of its officers or directors has been convicted of a felony involving insider trading, embezzlement, cybercrime, money laundering, terrorism financing, or financial fraud; that its officers, directors, and principal shareholders have the competence, experience, and integrity to warrant confidence; and that the applicant will comply with the Part once approved. A stablecoin issuer must also obtain the Superintendent’s approval before issuing any separately branded payment stablecoin.
Treatment of Existing New York-Licensed Issuers
An issuer that the Superintendent has already approved to issue a payment stablecoin before the Part takes effect is not required to obtain a new approval to keep issuing that stablecoin. It must, however, come into full compliance with the Part within 12 months of the effective date. The one exception is the BSA/AML/sanctions certification required under Section 202.9(b), which is subject to an earlier deadline. An existing issuer must submit that certification within 180 days of the effective date.
Reserve Requirements
Issuers must hold reserves backing their outstanding stablecoins, as required by the OCC Proposed Rule. Those reserves must be held by an eligible financial institution other than the issuer itself. Prior approval by the Superintendent is required if an issuer wishes to hold reserves at an eligible financial institution that is not an insured depository institution.
An issuer that offers more than one separately branded payment stablecoin must keep the reserves for each brand separately identifiable, make sure each brand is fully backed on its own, and hold a segregated pool of reserves for each brand. It may combine those pools only with the Superintendent’s prior written approval.
Reserve assets may consist only of the assets allowed under the OCC Proposed Rule, and issuers must manage how those assets are diversified and concentrated in line with the federal framework.
An issuer with $25 billion or more in stablecoins outstanding must hold, each business day, at least 0.5 percent of its reserve assets, capped at $500 million, in insured deposits or insured shares at an insured depository institution.
Issuers must publish a monthly report on the composition of their reserves, using the Department’s form. Each month, the CEO and CFO (or their equivalents) must certify to the Superintendent that the report is accurate, and the examination report must include a registered public accounting firm’s attestation to management’s assertions. Issuers must also obtain an annual attestation from a registered public accounting firm on the effectiveness of their internal controls and provide it to the Superintendent within 120 days after the period it covers.
An issuer must notify the Superintendent on any day its reserves drop below the required minimum. An issuer that falls short is immediately barred from issuing new stablecoins, except to move existing stablecoins between distributed ledgers without increasing the net amount outstanding, and may not resume issuing until it is back in compliance. If the shortfall lasts 15 consecutive business days (which the Superintendent may extend at their sole discretion), the issuer must start liquidating reserve assets and redeeming outstanding stablecoins, and it may not charge redemption fees during that liquidation. The Superintendent may require a remediation plan and, if the issuer is at significant risk of not curing the shortfall within a reasonable time, may order it to redeem all outstanding stablecoins.
Redemption
Issuers must comply with Section 4(a)(1)(B) of the GENIUS Act and publicly disclose a redemption policy. At a minimum, that policy must state the timeframe for redemption; explain any limits; describe when the redemption period may be extended; give clear instructions, including website links, for how holders redeem; and state any minimum redemption amount. Even if the issuer sets a minimum, it must honor any request to redeem one or more stablecoins, subject to appropriate customer screening and onboarding.
Redemption generally must occur within 2 business days of a request. Only the OCC, the Federal Reserve, or the Superintendent may impose discretionary limits on timely redemption. The Superintendent may extend the redemption period, at their sole discretion, if the issuer threatens safety and soundness or financial stability or if an extension otherwise serves the public interest. The issuer must submit its redemption policy to the Superintendent for approval before using it.
Capital and Operational Backstop
Issuers must hold common equity tier 1 capital and additional tier 1 capital (as defined in the OCC Proposed Rule) in an amount that matches the level and nature of their risks, including off-balance-sheet activities. The Superintendent will tailor the capital requirement to each issuer’s business model and risk profile. The requirement cannot be set higher than what is needed to keep the issuer operating, and it must be at least as strict and protective as the OCC Proposed Rule requires. The Superintendent may also set additional capital thresholds or metrics, including risk-based requirements.
Issuers must also keep an “operational backstop,” which is a pool of liquid, identifiable assets large enough to cover short-term liquidity needs and keep the business running (or get it running again) during a disruption. The backstop must meet or exceed the minimum amounts and asset types required under the OCC Proposed Rule.
An issuer that misses its minimum capital or backstop requirement at the end of a quarter may not issue new stablecoins, except to move stablecoins between ledgers without increasing the net amount outstanding, starting the first day of the next month and continuing until it fixes the shortfall. If it misses the requirement for two quarters in a row, it must begin liquidating reserves and redeeming stablecoins without charging redemption fees, and it must stop issuing new stablecoins going forward.
BSA, Anti-Money Laundering, and Sanctions Compliance
Issuers must comply with the Bank Secrecy Act (“BSA”) and the joint FinCEN/OFAC proposed rule published April 10, 2026 (the “FinCEN/OFAC Proposed Rule”). 391 Fed. Reg. 18582. 4See Stablecoin Issuers as Banks: FinCEN and OFAC Issue Comprehensive AML and Sanctions Rules under the GENIUS Act. That includes maintaining an AML/CFT program, a sanctions compliance program, and the required reporting. The FinCEN/OFAC Proposed Rule would treat stablecoin issuers as financial institutions under the BSA and, for the first time, require them to maintain formal sanctions compliance programs.
Within 180 days after approval, and every year thereafter, each issuer must file a certification under Section 5(i) of the GENIUS Act. Existing issuers must file their first certification within 180 days of the effective date. The Superintendent will share these certifications with the Secretary of the Treasury on request, and may revoke an issuer’s authorization if it does not file on time.
Operational, Risk-Management, and Cybersecurity Standards
Issuers must maintain internal controls and information systems suited to their size and complexity. These include separating duties, assessing risk effectively, reporting accurately and on time, and safeguarding assets. Issuers must also keep an internal audit system (or, if they are smaller, independent reviews of key controls); manage interest rate risk; grow their assets prudently and in step with their risk-management capabilities; monitor earnings; make sure transactions with insiders and affiliates are not excessive, are made on arm’s-length terms, and are documented and reviewed by the board; perform due diligence on and monitor their service providers; manage liquidity and concentration risk; and monitor compliance with applicable consumer protection laws.
On cybersecurity, issuers must meet the requirements that 23 NYCRR Part 500 applies to “Class A companies” (without applying Section 500.19), plus any additional requirements needed to reach outcomes at least as strict and protective as the OCC Proposed Rule. The Proposed Rule adds its own definitions of “customer,” “nonpublic information,” and “publicly available information,” and it imposes data-breach notice obligations. Beyond the notice requirements in Section 500.17(a), an issuer that finds unauthorized access to a customer’s nonpublic information must notify affected customers in the form, timing, and content required by New York General Business Law Section 899-aa.
Examination, Records, and Enforcement
The Superintendent may examine an issuer whenever the Superintendent considers it necessary or advisable, and must examine each issuer at least once a calendar year (subject to adjustment under Banking Law Section 36). Examinations may be on-site or remote, and issuers must give the Superintendent full and immediate access to their people, books and records, and facilities.
Issuers must keep a records retention policy strong enough to show their compliance, and must file any routine or special reports the Superintendent requires. An issuer with more than $50 billion in stablecoins outstanding that does not already report to the SEC under Section 13(a) or 15(d) of the Securities Exchange Act of 1934 must meet the audited-financial-statement requirements of the OCC Proposed Rule, and must submit audited financials to the Superintendent. The Superintendent may bring enforcement actions under the Banking Law, the Financial Services Law, or other applicable law for any violation.
Custody, Insolvency, and Transition
Authorized payment stablecoin issuers supervised by the Department must follow Section 10 of the GENIUS Act and the related federal rules when providing custody or safekeeping services, and must also meet applicable New York authorization requirements. The Superintendent will give the Federal Reserve any information the Federal Reserve determines it needs under Section 10(d) of the Act.
New York’s insolvency rules for issuers will be applied consistent with Section 11 of the GENIUS Act, and transition and waiver questions will follow Section 4(d) of the GENIUS Act.
If the Part conflicts with an issuer’s current supervisory agreement with the Department, the Part controls. The Department’s June 8, 2022 Industry Letter on issuing U.S. dollar-backed stablecoins will be withdrawn when the Part takes effect; until then, that guidance still applies.
Notable Open Questions and Areas of Uncertainty
The Proposed Rule is built to position New York for certification under the GENIUS Act’s substantial-similarity standard, but that standard is still just a proposal, with the comment period only recently concluded. It is not yet clear how Treasury will judge the strength and consistency of a state’s supervision and enforcement, or whether and how a certification could later be revisited or withdrawn.
Part 202 cross-references federal rules that are not yet final, namely the OCC’s Part 15 and the FinCEN/OFAC rule. New York’s requirements could change as those federal rules are finalized, and any gaps in the meantime could add compliance complexity.
As with the federal approach, setting capital requirements case by case gives regulators flexibility but provides less certainty up front for market participants trying to gauge the capital cost of operating in New York.
The operational backstop requirement adds liquidity obligations on top of reserve backing, and how it is calibrated to a given issuer’s business model and risk profile may draw comment.
Because New York issuers will need to meet the federal BSA/AML and sanctions framework, they will be expected to block, freeze, or reject certain transactions. That expectation sits uneasily with the immutability of blockchain technology and may require significant technology investment to reconcile.
Finally, because Part 202 takes effect when the GENIUS Act takes effect, its exact start date depends on how quickly the federal rules are finalized. That leaves issuers to plan against a moving target.
Comment Periods and Effective Date
The Proposed Rule was subject to a 10-day pre-proposal comment period that began on June 9, 2026. A formal 60-day comment period will follow once the Proposed Rule is published in the New York State Register. NYDFS has said it will review the comments and refine the Proposed Rule as needed.
The final regulation will take effect at the same time as the GENIUS Act, with a one-year transition period for existing New York-licensed issuers. The GENIUS Act takes effect on the earlier of 18 months after enactment (that is, January 18, 2027) or 120 days after the primary federal payment stablecoin regulators issue final implementing rules. Until the regulation applies, the Department’s June 8, 2022 Industry Letter remains in effect.
Conclusion
New York’s Proposed Rule is an important step toward bringing the nation’s first state stablecoin regime into line with the developing federal framework under the GENIUS Act, and it reinforces New York’s standing as a leading stablecoin regulator. Because the Part incorporates the federal rulebook by reference and is calibrated to Treasury’s substantial-similarity standard, current and prospective New York issuers, their parent companies, and other market participants should start assessing how the proposed requirements would affect their operations and should consider taking part in the comment process.