FSB: Global Stablecoins Remain Untested In Severe Stress, Regulator Calls For Stronger Cross-Border Cooperation
In Brief
FSB warns $300B global stablecoins remain untested in severe stress, citing multi-issuer risks and regulatory gaps, urging cross-border cooperation.
The Financial Stability Board (FSB) has published a new report warning that global stablecoin arrangements have yet to be tested under severe market stress or issuer insolvency, highlighting unresolved cross-border vulnerabilities as the sector continues to expand. According to the document, released on 12 October 2026, the total market value of stablecoins stood at around $300 billion as of mid-2026, essentially unchanged from a year earlier, with approximately 99% of that value pegged to the US dollar.
The report notes that global stablecoins remain predominantly a liquidity tool within crypto-asset markets, though they may also serve as an alternative store of value in some emerging market and developing economies (EMDEs) and could eventually enable faster, lower-cost domestic and cross-border payments. This evolving role, the FSB argues, carries distinct financial stability risks because stablecoins differ fundamentally from traditional financial instruments: they circulate as pseudonymous tokens, transferable around the clock on globally accessible secondary markets, while the issuers behind them may have no visibility into who holds their liabilities or where redemption demands will materialise.
In a crisis, the speed of 24/7 secondary-market trading could outpace redemption mechanisms, pressuring the stablecoin’s peg and potentially transmitting stress into the traditional financial system through fire sales of reserve assets, banking deposit withdrawals, or disruptions to payment and settlement chains. EMDEs face additional exposure from currency substitution and bank disintermediation, meaning stablecoins could become systemic at lower adoption thresholds than in advanced economies.
Multi-Issuer Structures and Regulatory Gaps Heighten Vulnerabilities
A particular concern raised by the FSB is the multi-issuer configuration, in which affiliated entities jointly issue a single global stablecoin while holding separate reserves. Because holders may redeem with any issuer in the group regardless of where tokens were issued, redemption demand during stress could concentrate on one entity, while cross-border reserve rebalancing may falter due to frictions in reserve mobility, market access, information flows, and coordination. In insolvency scenarios, it may remain unclear which national regime governs and how legal claims of holders would be resolved, especially where holders’ locations cannot be determined.
The interaction of national regulatory frameworks remains equally uncertain. Although jurisdictions are implementing the FSB’s 2023 high-level recommendations, differences in domestic mandates and legal systems have produced complex, fragmented corporate structures and created opportunities for regulatory arbitrage, with some issuers opting to operate from lightly regulated jurisdictions.
To address these gaps, the FSB recommends three priorities: enhanced monitoring of cross-border vulnerabilities using tailored metrics, including secondary-market liquidity and the geographic distribution of holdings, redemptions, and reserves; strengthened cross-border cooperation and information-sharing to support implementation of the 2023 recommendations; and the collection of emerging contingency approaches for managing the distress or failure of global stablecoin arrangements.
On data, the report acknowledges that stablecoin activity generates abundant information but stresses persistent challenges, from the pseudonymity of public blockchains to inconsistent proprietary compilation methods. The FSB suggests developing standardized monitoring metrics, deepening analytical expertise, and establishing industry best practices for data collection to improve comparability over time.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in crypto, AI, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in crypto, AI, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
