The Financial Stability Board warned that stablecoins could expose significant gaps in cross-border financial rules during a market crisis, as the crypto-pegged tokens remain untested under severe stress or insolvency scenarios.
In a report issued ahead of the G20 finance ministers and central bank governors' meeting on October 15, the FSB said national regulatory frameworks for stablecoins are developing at different speeds, raising questions about how holders would recover funds if an issuer failed. The watchdog called for more cross-border information sharing, monitoring, and crisis planning for stablecoin distress or failure.
The stablecoin market grew from approximately $206 billion in capitalization at the start of 2025 to $306 billion, with most value concentrated in U.S. dollar-pegged tokens. While primarily used for moving funds in and out of crypto investments, stablecoins could eventually enable faster, cheaper cross-border payments, the FSB noted.
Structural Risks in Multi-Issuer Models
The FSB identified higher risks in multi-issuer stablecoin structures, where affiliated companies issue the same token and share liability while holding reserve assets in separate jurisdictions. If redemption demands concentrate on a single entity while needed assets remain elsewhere, moving reserves may become difficult during a crisis. Legal uncertainty could also arise regarding which country's insolvency rules would apply in case of issuer failure.
Market Structure and Contagion Concerns
Stablecoins trade around the clock while markets for backing assets operate on set schedules. This mismatch could be problematic during a liquidity run: if redemptions cannot keep pace with token sales, the peg may break. Such forced reserve sales and bank deposit withdrawals could spread shocks into traditional financial markets as investors seek liquidity.
The FSB noted that pseudonymous cryptocurrency transactions complicate tracking, making it difficult to determine where holders are located and which jurisdiction applies. Deep, liquid secondary markets could help stabilize token prices through arbitrage, the report added.
FSB Chair Andrew Bailey stated that global stablecoin arrangements are inherently cross-border, yet regulatory cooperation remains in its early stages. The FSB's recommendations are not legally binding, though member jurisdictions typically commit to implementing agreed standards nationally.
