The New York State Department of Financial Services (NYDFS) has proposed tighter regulation of Stablecoin issuers in an effort to entrench its 2022 recommendations federally. Acting Head of the Department, Kathleen Asrow, emphasized the need for 1:1 dollar tokens, guaranteed repayment of the nominal amount on demand, and mandatory independent audit.

New initiatives include the introduction of comprehensive risk management programs, including insider-transaction monitoring and cyber security. NYDFS also proposes to introduce a double confirmation of reserves: it must be signed monthly by the issuer’s CEO and CFO, and annually by an independent audit firm. In addition, the regulator wants to limit the concentration of funds in a single Castrodian by requiring issuers with an output above $25 billion to hold at least 0.5% of their reserves (up to $500 million) in insured deposits.

It is proposed to set the maturity limit for Stablecoins at two working days. If the issuer’s reserves fall below the minimum and remain at that level for 15 consecutive business days, the company will be required to commence liquidation and repay all issued tokens free of charge. These measures are being taken against the background of the growing interest of traditional fintech in digital assets: in May, NYDFS issued a BitLicense license to Mastercard for operations with stablecoins.