The Financial Stability Board (FSB) — the international body that coordinates financial-stability standards across national authorities — has released a new report warning that global stablecoin arrangements have never been tested under conditions of severe market stress or issuer insolvency, and that cross-border vulnerabilities remain unresolved even as the sector continues to expand.

According to the document, published on 12 October 2026, the total market value of stablecoins — digital tokens designed to hold a steady value against an underlying asset, typically a fiat currency — stood at roughly $300 billion as of mid-2026, essentially unchanged from a year earlier, with approximately 99% of that value pegged to the US dollar.

The report observes that global stablecoins continue to function primarily as a liquidity tool within crypto-asset markets. However, they may also serve as an alternative store of value in some emerging market and developing economies (EMDEs), and could eventually enable faster, lower-cost domestic and cross-border payments. The FSB argues that this evolving role carries distinct financial stability risks, because stablecoins differ fundamentally from traditional financial instruments: they circulate as pseudonymous tokens transferable around the clock on globally accessible secondary markets, while the issuers behind them may have no visibility into who holds their liabilities or where redemption demands will materialise.

In a crisis, the speed of 24/7 secondary-market trading could outpace redemption mechanisms — the arrangements through which holders exchange tokens for the reserves backing them — pressuring the stablecoin's peg and potentially transmitting stress into the traditional financial system through fire sales of reserve assets, banking deposit withdrawals, or disruptions to payment and settlement chains. EMDEs face additional exposure from currency substitution and bank disintermediation, meaning stablecoins could become systemic at lower adoption thresholds than in advanced economies.

Multi-Issuer Structures and Regulatory Gaps Heighten Vulnerabilities

A particular concern raised by the FSB is the multi-issuer configuration, in which affiliated entities jointly issue a single global stablecoin while holding separate reserves. Because holders may redeem with any issuer in the group regardless of where tokens were issued, redemption demand during stress could concentrate on one entity, while cross-border reserve rebalancing may falter due to frictions in reserve mobility, market access, information flows, and coordination. In insolvency scenarios, it may remain unclear which national regime governs and how legal claims of holders would be resolved — especially where the location of holders cannot be determined.

The interaction of national regulatory frameworks remains equally uncertain. Although jurisdictions are implementing the FSB's 2023 high-level recommendations, differences in domestic mandates and legal systems have produced complex, fragmented corporate structures and created opportunities for regulatory arbitrage, with some issuers opting to operate from lightly regulated jurisdictions. Because the FSB sets standards rather than binding law, its recommendations take practical effect only through implementation by national authorities — the very layer where the report identifies the deepest fragmentation today.

To address these gaps, the FSB sets out three priorities: enhanced monitoring of cross-border vulnerabilities using tailored metrics, including secondary-market liquidity and the geographic distribution of holdings, redemptions, and reserves; strengthened cross-border cooperation and information-sharing to support implementation of the 2023 recommendations; and the collection of emerging contingency approaches for managing the distress or failure of global stablecoin arrangements. For anyone tracking the sector, those priorities double as the roadmap to watch: the monitoring metrics authorities build, the information channels they open across borders, and the contingency playbooks they gather will indicate how far the framework has moved toward readiness for the kind of severe stress the report says the sector has never experienced.

On data, the report acknowledges that stablecoin activity generates abundant information but stresses persistent challenges, from the pseudonymity of public blockchains to inconsistent proprietary compilation methods. The FSB suggests developing standardized monitoring metrics, deepening analytical expertise, and establishing industry best practices for data collection to improve comparability over time.

The full report is available on the Financial Stability Board's official website.