The New York State Department of Financial Services has set out strict reserve requirements for firms looking to issue USD-backed stablecoins in the state.
Under new regulatory guidance, issued by superintendent Adrienne Harris, crypto firms must ensure that stablecoins are fully backed by a reserve of assets.
Issuers must adopt "clear, conspicuous redemption policies", approved in advance by DFS in writing, that confer on any lawful holder of the stablecoin a right to redeem it in a timely fashion at par for the US dollar.
Meanwhile, the assets in the reserve have to be segregated from the proprietary assets of the issuer and must be held in custody with state or federally chartered depository institutions or asset custodians.
The reserves must also be subject to an examination by independent auditors at least once a month.