Stablecoins Haven't Seen a Crisis — The FSB Just Said That's the Problem 🧾

The Financial Stability Board (FSB) told G20 finance ministers and central bank governors that cross-border oversight and crisis-management tools for stablecoins "remain immature or are not yet developed," warning that the $306 billion stablecoin market has not been tested under severe stress or issuer insolvency. In a letter submitted ahead of the G20's Thursday meeting, 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." The stablecoin market started 2025 at around $206 billion in capitalization.

The FSB's 2025 review found that 11 of 28 surveyed jurisdictions had finalized stablecoin regulatory frameworks, and Bailey urged G20 members to back the watchdog's newly finalized practices for responsible AI adoption in finance, adding that "AI therefore requires our continued close attention alongside careful management by financial institutions." The AI safeguards cover organization-wide governance, AI development and deployment, cybersecurity and third-party service risks, and Bailey cautioned that sophisticated AI-enabled cyber threats could undermine the resilience of critical financial institutions and market infrastructure.

In an accompanying report, the FSB warned that stablecoin runs could spill into traditional markets through forced sales of reserve assets and withdrawals of bank deposits. It flagged heightened risks in multi-issuer structures, in which affiliated companies issue the same stablecoin and share liability while keeping reserve assets in separate jurisdictions. In those arrangements, redemption demand could concentrate on a single issuer while reserves sit in another country, making asset transfers more difficult during a crisis and raising uncertainty about which jurisdiction's insolvency rules would apply.

The FSB said 24/7 stablecoin trading and pseudonymous transactions add to systemic shock risks, while the assets backing stablecoins trade only during set market hours. The same concerns have been raised by other regulators: European Central Bank President Christine Lagarde warned in 2025 of redemption risks involving stablecoins issued inside and outside the European Union, and European central bankers said in July that AI advances could amplify market volatility and cybersecurity threats. The FSB proposed 12 practices for responsible AI adoption in June before finalizing its guidance for the G20 meeting.