Financial Stability Board urges cross-border information sharing and crisis planning for stablecoins

The Financial Stability Board wants national regulators to share more information and plan jointly for stablecoin distress or failure. Its recommendations are not legally binding, though FSB members tend to commit to putting agreed standards into practice nationally. In a report, the G20 watchdog warned that stablecoins have not been tested under severe stress or insolvency, and that national regulatory frameworks are developing at different speeds, raising questions about how holders would recover their funds if an issuer went under. CoinDesk reported the findings on Oct. 12.

The report put the stablecoin market at about $206 billion in capitalization at the start of 2025 and $306 billion more recently, an increase of roughly 49%. Most of that value sits in dollar-pegged tokens. Much of it is used to move in and out of crypto investments, but the coins could eventually enable faster, cheaper payments, including across borders, the FSB said.

"Global stablecoin arrangements are inherently cross-border, yet national regulations are taking shape at different speeds and cross-border cooperation in this area is still in its infancy," Chair Andrew Bailey wrote in an accompanying letter. Bailey also serves as governor of the Bank of England.

Multi-issuer structures carry higher risks, the FSB said. Affiliated companies can issue the same token and share liability while holding reserve assets in separate jurisdictions. If holders can redeem with any issuer in the group, demand could pile up on a single entity while the needed assets sit elsewhere, and moving those reserves may become harder during a crisis. If an issuer fails, it may be unclear which country's insolvency rules apply.

Stablecoins trade around the clock, while the markets for the assets backing them keep set operating hours. During a run, the FSB warned, redemptions may not keep pace with selling, and a token can lose its peg. Forced reserve sales and bank deposit withdrawals could then spread the shock into traditional financial markets as investors scramble for liquidity. The FSB noted the offsetting case as well: deep, liquid secondary markets can pull a token back toward its peg through arbitrage.

The FSB identified weak data as a further problem. The pseudonymous nature of crypto transactions can make it hard to establish where holders are based and which jurisdiction applies, complicating cross-border coordination before a failure rather than after one.