Stablecoins Face Untested Stress
The Financial Stability Board says stablecoins have not been tested in a severe market crisis or an issuer failure. The G20 watchdog published a report calling for more cross-border information sharing, monitoring, and planning for stablecoin distress. The market started 2025 at about $206 billion and has grown to $306 billion. Most of that value sits in stablecoins pegged to the U.S. dollar. Many people use them mainly to move in and out of crypto investments. The FSB says they could eventually support faster, cheaper payments, including across borders.
Rules Are Moving at Different Speeds
The report notes that global stablecoin arrangements are cross-border by nature. National rules, however, are taking shape at different speeds. Chair Andrew Bailey said in an accompanying letter that cross-border cooperation in this area is still in its infancy. That matters if an issuer fails. Holders may not know how to recover funds, and regulators may not have a clear playbook for a crisis that crosses jurisdictions.
Multi-Issuer Structures Add Risk
The FSB points to higher risks in multi-issuer structures. Affiliated companies can issue the same stablecoin and share liability while holding reserve assets in separate countries. If holders can redeem with any issuer in the group, demand could pile up on one entity while the needed assets sit somewhere else. Moving those reserves may become harder during a crisis. Legal claims could also become unclear if an issuer fails. It may be difficult to determine which country’s insolvency rules apply.
Trading Hours and Data Gaps
Stablecoins trade around the clock. The markets for assets backing them have set operating hours. That mismatch could matter during a run. If redemptions cannot keep pace with selling, a token may lose its peg. The FSB adds that deep, liquid secondary markets could help pull a token back toward its peg through arbitrage. Still, forced reserve sales and bank deposit withdrawals could spread the shock into traditional financial markets as investors scramble for liquidity.
The FSB also flags weak data. Pseudonymous crypto transactions can make it hard to tell where holders are based and which jurisdiction applies. That complicates monitoring and recovery. The report does not predict an imminent crisis. It argues that preparations need to catch up with the market’s growth. Stablecoins may remain mostly a crypto trading tool for now, but their cross-border reach makes the gaps harder to ignore.
