From CoinDesk · By Francisco Rodrigues, AI Boost
The FSB warned global stablecoins and national rules remain untested in severe market crises, risking redemption and reserve delays.
The watchdog called for more cross-border information sharing, monitoring and planning for distress or failure in the fiat-pegged tokens.
Multi-issuer models can trap reserves in one jurisdiction while redemption demands hit another, complicating cross-border crisis response, while 24/7 trading and pseudonymous transactions increase systemic shock risks, it said.
The Financial Stability Board (FSB) warned that stablecoins could expose gaps in cross-border financial rules during a market crisis and remain untested in such a scenario, and called for more cross-border information sharing, monitoring and planning for stablecoin distress or failure.
The G20’s financial watchdog said in a report that global stablecoins, crypto tokens whose value is pegged to a fiat currency, have not been tested under severe stress or insolvency, while the national regulatory frameworks are developing at different speeds, raising questions over how holders would recover their funds if an issuer went under.
The stablecoin market started 2025 at around $206 billion in capitalization, and has grown to $306 billion. Most of that value is in stablecoins pegged to the U.S. dollar. While much of the value is used mainly to move in and out of crypto investments, 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.
The report points to higher risks in so-called multi-issuer structures. Affiliated companies can issue the same stablecoin and share liability for it while keeping 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. Moving those reserves may become harder during a crisis, the FSB warned. Legal claims could also become unclear if an issuer fails, as it It may be difficult to determine which country’s insolvency rules would apply.
Stablecoins can trade around the clock, while the markets for assets backing them have set operating hours. That mismatch could matter during a run because if redemptions cannot keep pace with selling, a token may lose its peg, the report added.
However, the FSB noted that deep, liquid secondary markets could also help pull a token back toward its peg through arbitrage.
Forced reserve sales and bank deposit withdrawals could then spread the shock into traditional financial markets as investors scramble for liquidity.