Finance12 October, 20262 min read
Financial Stability Board Warns Cross-Border Stablecoin Rules Remain Untested In Crisis
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Cross-border stablecoin oversight remains underdeveloped and untested in crisis scenarios. Stablecoin runs could spill into traditional markets, delaying redemptions and reserves.
8 outlets told this the same way.
FSB flags stablecoin gaps
The Financial Stability Board warned that stablecoins could expose gaps in cross-border financial rules during a market crisis and remain untested in such a scenario, and the FSB called for more cross-border information sharing, monitoring and planning for stablecoin distress or failure. FSB Chair Andrew Bailey wrote that "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," in an accompanying letter. The FSB said global stablecoins have not been tested under severe stress or insolvency, while national regulatory frameworks are developing at different speeds, raising questions over how holders would recover their funds if an issuer went under.
The FSB warned that multi-issuer stablecoin structures could trap reserves in one jurisdiction while redemption demands hit another, complicating cross-border crisis response. The FSB also warned that stablecoins can trade around the clock while markets for assets backing them have set operating hours, and that mismatch could matter during a run if redemptions cannot keep pace with selling.
Runs could hit banks
The FSB warned that stablecoin runs could spill into traditional markets through forced sales of reserve assets and withdrawals of bank deposits, transmitting stress beyond crypto markets.
The FSB said multi-issuer arrangements could complicate crisis management when redemption demand concentrates on one issuer while reserves are held across different jurisdictions.
The FSB said the 2025 review of 28 jurisdictions found that only 11 had finalized stablecoin regulatory frameworks, leaving uneven readiness across countries.
The FSB also warned that the pseudonymous nature of cryptocurrency transactions can make it hard to tell where holders are based and which jurisdiction applies, creating weak data for crisis planning.
The FSB submitted its letter to G20 finance ministers and central bank governors ahead of their Oct. 15 meeting.
AI guidance paired with stablecoins
The FSB paired its stablecoin warnings with risks related to artificial intelligence, and it told G20 officials that AI presents a growing threat to the resilience of critical financial infrastructure.
Andrew Bailey wrote, "AI therefore requires our continued close attention alongside careful management by financial institutions," in the letter sent to G20 finance ministers and central bank governors.
The FSB said its finalized AI guidance covers organization-wide governance, the development and deployment of AI systems, cybersecurity, and third-party service risks.
The FSB warned that increasingly sophisticated cyber threats enabled by AI could undermine the resilience of critical financial institutions and market infrastructure.
The FSB said its letter and accompanying reports were published ahead of the Oct. 15 meeting, and it described further work to enhance monitoring of cross-border vulnerabilities and support implementation of the 2023 recommendations.