New York Financial Department Releases Guidelines On Dollar-Backed Stable Coins
The New York Financial Department has released “Guidance on the Issuance of U.S. Dollar-Backed Stablecoins” for all the BitLicence Holders (DFS Regulated Entities).
The department of financial services said that the guidelines should act as the main principle of the requirements that every New York-based company which has issued or would likely to issue dollar-backed stable coins in the future, must follow.
According to the superintendent at the DFS New York, Adrienne A. Harris, “Leveraging our years of expertise in the space, our Regulatory Guidance today creates clear criteria for virtual currency companies looking to issue USD-backed stablecoins in New York,”
The guidance covers three targeted areas in the dollar-backed stable coins business network. Starting off with the backing and redeemability of the stable coins in the associated channels. Secondly, it defines the criteria of the asset reserves in the dollar-backed stable coins. The third area is the attestation, or independent audits, of the stable coins.
The NFD has associated the backing of the stable coins that emphasizes the preservation of the assets. This states that the nominal value of the existing units of stable coins must at least match the market value of the reserve.
On redeemability, the guidance clearly states to have a proper redemption policy for every business that provides stable coins. The policy must allow stable coin owners to exchange their holdings one on one with the United States dollar. The processing of the conversion should also complete within two business days after the initiation of the redemption by the receiver.
The point which marks the reservation of assets in dollar-backed stable coins focuses on the issuers of the stable coins to separate their reserve assets from their proprietary assets. It states that each asset must be held in a federal or state-chartered depository institution; moreover, each deposit must be ensured by the Federal Deposit Insurance Corporation or a DFS-verified asset custodian.
On the attestation regulations of the stable coins, the Department of Financial Services directs to perform an independent audit on the stable coin issuer every month, by a certified public accountant.