NYDFS Targets Circle and Paxos With New Stablecoin Reserve Rules

NYDFS proposes stablecoin reserve caps targeting Circle and Paxos, aligning New York’s framework with the federal GENIUS Act requirements.

The New York Department of Financial Services is moving to tighten its grip on stablecoin issuers. 

The agency has proposed new rules targeting major issuers, including Circle and Paxos. The regulation introduces reserve concentration caps and brings New York’s framework in line with the federal GENIUS Act. 

Acting Superintendent Kaitlin Asrow announced the proposal, marking a significant step in how New York oversees dollar-backed digital assets.

Read also: 

Solana Steals Spotlight as Mastercard Stablecoin Settlement Goes Always-On Now

Reserve Caps Put Pressure on Large Issuers

The proposed rules set hard limits on how issuers manage their reserves. 

Any issuer with more than $25 billion in outstanding stablecoin supply must hold a minimum reserve floor in insured deposits. That floor is set at 0.5% of outstanding supply, capped at $500 million.

The goal is to force diversification across multiple custodians and reduce concentrated exposure that could create systemic risk. The rule also sets maximum amounts of reserves that can sit with any single custodian.

Both Circle and Paxos operate at a scale that puts them directly in the crosshairs of these thresholds. The NYDFS framed the move as a data-driven response to market growth. 

The department said it regularly monitors key trends through research and data collection to stay ahead of industry developments.

NYDFS Proposes Stablecoin Reserve Caps and Federal Alignment Under GENIUS Act

The New York Department of Financial Services (NYDFS) proposes a comprehensive regulatory package to align the state's stablecoin framework with the federal GENIUS Act.

The "Authorized Payment… pic.twitter.com/fbrVPQIvSJ

— BSCN (@BSCNews) June 10, 2026

Aligning With the GENIUS Act

The NYDFS built this proposal on top of its existing June 2022 stablecoin guidance. 

That earlier framework already covered backing and redeemability standards, permissible reserves, and independent audit requirements. The new regulation adds provisions specifically designed to meet federal certification requirements under the GENIUS Act.

Asrow said the GENIUS Act mirrors much of what New York already requires. The new proposal fills in the remaining gaps to ensure the state qualifies under the federal framework. 

According to the department, the regulation addresses new federal provisions on risk management programs, information security, internal controls, and service provider arrangements.

Timeline and Transition Rules

The proposal kicks off with a 10-day preproposal comment period. After that, a 60-day comment period follows upon publication in the State Register. NYDFS said it will review all comments before finalizing the rule.

The final regulation will take effect when the GENIUS Act becomes effective. Existing New York-licensed issuers get a one-year transition period to comply. Until the new regulation applies, the department’s current Stablecoin Regulatory Guidance stays in force. 

The NYDFS said it remains committed to keeping pace with the virtual currency industry as it evolves.