Global Financial Watchdog Calls for Cross-Border Information Sharing and Planning for a Stablecoin Crisis

Coins jointly issued by multiple companies could trap reserves in one jurisdiction while redemption demands hit another, complicating the cross-border crisis response.

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 trouble or failure.

The G20 financial watchdog said in a report that global stablecoins, crypto tokens whose value is tied to a fiat currency, have not been tested under extreme pressure or bankruptcy, while national regulatory frameworks are developing at different speeds, raising questions about how holders can recover their funds if an issuer goes under.

The stablecoin market started 2025 at around $206 billion and has grown to $306 billion. Most of this value is in stablecoins pegged to the US dollar. While most of the value is mainly used to enter and exit crypto investments, the coins could ultimately enable faster and cheaper payments, including across borders, the FSB said.

"Global stablecoin arrangements are cross-border in nature, but national regulations are evolving at different speeds and cross-border cooperation in this area is still in its infancy," board chairman Andrew Bailey wrote in a letter.

The report points to higher risks in so-called multi-issuer structures. Affiliates can issue the same stablecoin and in return hold reserve assets in separate jurisdictions.

If holders can redeem with any issuer in the group, demand can be concentrated on a single unit, while the required assets are located elsewhere. The FSB warned that moving these stocks could become more difficult during a crisis. Legal claims may also become unclear if the issuer fails, as it may be difficult to determine which country's bankruptcy laws apply.

Stablecoins can trade around the clock, while the underlying asset markets have set business hours. This mismatch can be important during execution because if redemptions cannot be synchronized with sales, a token may lose its link.

However, the FSB noted that deep and liquid secondary markets can also help bring the token back to its peg through arbitrage.

The sale of mandatory reserves and the withdrawal of bank deposits could spread the shock to traditional financial markets as investors scramble for liquidity.

The FSB also cited poor data as a problem, as the anonymous nature of cryptocurrency transactions can make it difficult to determine where holders are based and which jurisdictions apply.

The FSB called for cross-border information sharing, monitoring and planning for problems or failures of stablecoins. Its recommendations are not legally binding, but members tend to implement agreed standards at the national level.

Bailey, who also serves as governor of the Bank of England, has warned in the past that international rules for stablecoins have stalled. The FSB report was published just a few days before the G20 finance ministers and central bank governors on October 15.

Diversified RWA stablecoins maintain a 5-7% return on real credit as crypto funding drops to 4%. GENIUS increases performance off-chain. TAM increases to $4 billion in 3 years.