In an effort to safeguard consumers and financial institutions, the New York Department of Financial Services on Wednesday has published its first guidance focused on how stablecoins should be regulated. Specifically, stablecoins traded in New York must be fully backed by a Reserve of assets of which need to be segregated from the issuers' proprietary assets and attested by an auditor on a regular basis, the NYDFS said. The Reserve should consist of liquid short-term debt, including U.S. Treasury Bills purchased within three months from expiration, Reverse repurchase agreements fully collateralized by T-bills, T-notes, and T-bonds on an overnight basis, according to the guidance. Meanwhile, regulators have been increasingly scrutinizing the stablecoin marketplace, in particular, after algorithmic stablecoin TerraUST (UST-USD) and its sister token Luna (LUNA-USD) ultimately collapsed last month, wiping out tens of billions in value. Towards the end of May, Federal Reserve Governor Lael Brainard said a Fed digital
