FSB warns stablecoins untested in crisis, urges cross-border failure planning
Global stablecoin crisis frameworks remain largely untested under severe stress, and the Financial Stability Board wants regulators to plan for a failure before one happens.
The watchdog’s note published October 12 finds significant gaps in regulatory, supervisory and crisis-management frameworks for global stablecoin arrangements. It calls on authorities to share information across borders, fully adopt the FSB’s 2023 stablecoin recommendations and step up research into how to handle a stablecoin issuer in distress.
FSB Chair Andrew Bailey, who also serves as governor of the Bank of England, made the same point in a letter to G20 finance ministers and central bank governors sent with the note. “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,” Bailey wrote.
The timing is deliberate. The G20 finance ministers and central bank governors meet October 15, three days after publication, with the stablecoin file on the table.
The FSB’s argument rests on a structural mismatch. In a multi-issuer arrangement, holders can redeem with any entity in the group, so redemption demand can pile onto one issuer while the reserves backing them sit in another jurisdiction. The FSB’s note says it may then be unclear which country’s insolvency rules apply. Its examples of such structures are Circle’s USDC and Paxos Global Dollar; neither issuer has commented, and the FSB names them as examples of a structure, not findings against either company.
The stakes have grown with the market. The FSB’s own figures put the stablecoin market at $306 billion as of October 12, up from about $206 billion at the start of 2025, with 99% of it pegged to the US dollar.
The FSB’s prescriptions are not legally binding, but its members tend to commit to putting agreed standards into national practice. A 2025 FSB survey found only 11 of 28 jurisdictions had completed stablecoin regulatory frameworks, which is the gap the new note asks them to close.
