The Financial Stability Board (FSB), an international body comprising national financial authorities and standard setters based in Basel, has released a note warning that both global stablecoins and national regulatory frameworks are untested under conditions of severe stress or insolvency.
Stablecoin market size and structure
The FSB submitted its findings to G20 finance ministers and central bank governors in response to a request from the U.S. G20 presidency. The note puts the global stablecoin market at approximately $300 billion as of mid-2026, showing minimal change over the preceding year. According to the FSB, about 99% of stablecoins by value are pegged to the U.S. dollar, underscoring the dominant role of dollar-linked tokens.
Andrew Bailey, Chair of the FSB and Governor of the Bank of England, emphasized differences in regulatory progress globally. In his letter to the G20, Bailey highlighted 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.”
“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,” Andrew Bailey wrote to the G20.
Cross-border risks and regulatory challenges
The FSB note observed that, unlike traditional banks which know their depositors, stablecoin issuers often lack knowledge of who holds their tokens or from which country redemption requests could originate. Continuous secondary trading in stablecoins was identified as a potential accelerant in crisis situations, potentially hastening market sell-offs. Meanwhile, both legal protection for holders and the management of reserves may depend on the specific jurisdiction involved—posing challenges in a cross-border setting.
If a major global stablecoin fails, there could be significant uncertainty regarding which national insolvency framework would apply, given the international nature of both issuers and users.
Multi-issuer stablecoins and legal uncertainty
Particular concern was noted for multi-issuer stablecoins, where several interconnected companies share legal liability for a token but maintain separate reserves. In such cases, holders can redeem through any affiliated entity, leading to potential surges in redemption requests focused on one business. Moving reserves across borders to address these requests may face regulatory or operational friction, especially under stress. The FSB highlighted that, when it is difficult to determine where holders are located, establishing their legal rights becomes problematic.
Bailey stated that mechanisms for cross-border crisis management and cooperation in times of stress or insolvency “remain immature or are not yet developed.”
Ongoing work and recommendations
The FSB listed three key areas requiring further attention: enhanced monitoring of cross-border vulnerabilities, strengthened international cooperation and information sharing under its 2023 stablecoin recommendations, and collecting data on new approaches for managing potential distress or failure. The note did not outline a specific crisis plan. Decisions by the FSB, which is not a regulatory agency, are not legally binding.
On the subject of data, the FSB reported that authorities still depend largely on private firms for data compilation. These providers use varying methods, and the pseudonymous nature of blockchains means officials often cannot determine stablecoin use cases or origins.
In a related area, the FSB and the International Monetary Fund have jointly recommended against imposing blanket bans on cryptocurrencies, as detailed in a 2023 G20 report.
Mini dictionary: Financial Stability Board (FSB): An international organization that monitors and makes recommendations about the global financial system; headquartered in Basel, it coordinates national authorities and standard setters to promote financial stability.
| Aspect | Traditional Banks | Stablecoin Issuers |
|---|---|---|
| Knowledge of holders | Yes | No |
| Secondary trading hours | Limited | 24/7 |
| Legal protection | Jurisdiction clear | Jurisdiction often unclear |
| Cross-border crisis cooperation | More established | Immature or undeveloped |
