The New York State Department of Financial Services (NYDFS), has set New Guidelines for Stablecoin businesses following market turmoil triggered by the collapse of a Digital Token whose value had been pegged to the dollar.
With Congress still grappling with how to Regulate the Popular Digital assets, DFS Superintendent Adrienne Harris, on Wednesday, issued New Standards requiring Issuers to maintain a Stockpile of high-quality Reserve Assets that would allow their Tokens to be Redeemed on a One-to-One basis with the U.S. dollar.
Stablecoins refer to Digital Tokens, whose value is often pegged to fiat Currencies like the U.S. dollar and are widely used to facilitate Trades for popular Crypto assets like Bitcoin and Ether.
While traditional Stablecoins often back their Tokens with Reserve Assets, some, such as the recently collapsed Token TerraUSD, rely on a combination of Computer Code and Market Incentives to keep their Value Constant.
NYDFS, the most powerful State-level Financial Regulator in the U.S., became the First State to have its own Regulatory framework for Crypto businesses when it launched the BitLicense program in 2015.
The Guidelines apply to New York-licensed Stablecoin Issuers.
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