The Financial Stability Board (FSB) has warned that stablecoins could expose gaps in cross-border financial rules during a severe market crisis, and that both global stablecoin arrangements and national rulebooks remain untested under such conditions, risking delays in redemptions and access to reserves. In a new report, the G20's financial watchdog called for greater cross-border information sharing, monitoring, and planning for distress or failure in the fiat-pegged tokens.

The FSB was created by the G20 in 2009, in the aftermath of the global financial crisis, to coordinate financial regulation across jurisdictions — the same cross-border remit its stablecoin warning now stresses.

According to the report, global stablecoins — crypto tokens whose value is pegged to a fiat currency — have not been tested under severe stress or insolvency. At the same time, national regulatory frameworks are developing at different speeds, raising questions over how holders would recover their funds if an issuer went under. The European Union's Markets in Crypto-Assets framework, which began applying its stablecoin rules in mid-2024, and the U.S. GENIUS Act, signed into law in July 2025, illustrate how far apart those national timelines already run.

The stablecoin market began 2025 at around $206 billion in total capitalization and has since grown to $306 billion, with most of that value concentrated in tokens pegged to the U.S. dollar. While much of it is used mainly to move in and out of crypto investments, the FSB said such coins could eventually enable faster, cheaper payments, including across borders.

"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 an accompanying letter.

Multi-issuer structures raise redemption risks

The report points to heightened risks in so-called multi-issuer structures, in which affiliated companies issue the same stablecoin and share liability for it while keeping reserve assets in separate jurisdictions. In such models, reserves can effectively be trapped in one jurisdiction while redemption demands hit another, complicating any cross-border crisis response. 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, the FSB warned. Legal claims could also become unclear if an issuer fails, as it may be difficult to determine which country's insolvency rules would apply.

24/7 trading versus set market hours

The FSB also flagged a structural timing mismatch: stablecoins can trade around the clock, while the markets for the assets backing them operate only during set hours. That mismatch could matter during a run, because if redemptions cannot keep pace with selling, a token may lose its peg, the report said. It noted, however, that deep and liquid secondary markets could also help pull a token back toward its peg through arbitrage.

In such a scenario, forced sales of reserve assets and withdrawals of bank deposits could then spread the shock into traditional financial markets as investors scramble for liquidity. Issuers commonly hold reserves in instruments such as short-dated government debt and bank deposits — assets that any forced selling would touch directly. The FSB additionally cited weak data as a problem, as the pseudonymous nature of cryptocurrency transactions can make it hard to tell where holders are based and which jurisdiction applies.

The watchdog called for more cross-border information sharing, monitoring, and planning for stablecoin distress or failure. Its recommendations are not legally binding, but members tend to commit to putting agreed standards into practice nationally — and the FSB tracks how members implement its standards when reporting back to the G20.

Bailey, who also serves as governor of the Bank of England, has in the past warned that international stablecoin rulemaking had stalled. The FSB's report comes just days ahead of the G20 finance ministers and central bank governors' meeting on Oct. 15, the next scheduled gathering where member governments can weigh a collective response.