The Financial Stability Board (FSB) has warned that stablecoins could expose weaknesses in international financial regulation during a market crisis, particularly when issuers operate across multiple countries. The global watchdog is urging authorities to improve cross-border data sharing, strengthen oversight and develop coordinated plans for handling potential stablecoin failures.
In a new report, the G20’s financial monitoring body said global stablecoins—digital tokens designed to maintain a stable value against traditional currencies—have not been tested during severe market turmoil or an issuer’s insolvency. Because national regulatory systems are developing at different rates, uncertainty remains over how investors could recover their funds if a stablecoin provider collapses.
The stablecoin market has expanded from approximately $206 billion at the beginning of 2025 to around $306 billion. U.S. dollar-pegged tokens account for most of the market’s value. Although stablecoins are primarily used to move money into and out of cryptocurrency investments, the FSB said they could eventually make payments faster and cheaper, including for international transfers.
“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,” FSB Chair Andrew Bailey wrote in a letter accompanying the report.
Multiple-Issuer Models Raise Financial Stability Concerns
The FSB highlighted particular risks associated with stablecoins issued by several affiliated companies. Under these arrangements, multiple entities may issue the same token and share liability while holding their backing assets in different countries.
A sudden increase in redemption requests could place significant pressure on one issuer, even if sufficient reserves are held by another company within the group. Transferring those assets across jurisdictions during a financial crisis could prove difficult, the report warned.
The failure of one issuer could also create uncertainty about which country’s insolvency laws would govern the process, potentially complicating claims by stablecoin holders seeking to recover their money.
Continuous Trading Could Intensify Redemption Pressure
Stablecoins trade around the clock, whereas the markets for their underlying reserve assets have defined operating hours. The difference could create problems during a wave of redemptions if issuers are unable to sell reserve assets and meet withdrawal requests quickly enough.
Under those conditions, a stablecoin could lose its peg to the currency it is designed to track, the FSB said. However, the report noted that sufficiently deep and liquid secondary markets could help restore the peg through arbitrage, as traders respond to differences between a token’s market price and its intended value.
Heavy redemption activity could also force issuers to liquidate reserves and withdraw deposits from banks. Such actions could transmit pressure into traditional financial markets as investors and institutions compete for available liquidity.
Data Gaps Complicate International Supervision
The FSB also warned that limited information about stablecoin holders makes effective oversight more difficult. Cryptocurrency transactions often use pseudonymous addresses, leaving authorities with incomplete information about users’ locations and the jurisdictions responsible for regulating them.
The watchdog called for stronger international cooperation, more effective monitoring and advance planning for scenarios involving stablecoin distress or issuer failure.
Although the FSB’s recommendations are not legally binding, member jurisdictions generally work to implement agreed standards through their national regulatory frameworks.
Bailey, who also serves as governor of the Bank of England, has previously cautioned that international coordination on stablecoin rules has stalled. The report was released shortly before G20 finance ministers and central bank governors were scheduled to meet on October 15.
