Global Financial Watchdog Urges Cross-Border Data Sharing for Stablecoin Crisis Planning

Stablecoins issued by multiple companies can create complications during a financial crisis, particularly when reserve assets are held in one country while redemption requests surge in another. The Financial Stability Board (FSB) has warned that these arrangements could expose weaknesses in international financial regulation and called for stronger cross-border information sharing, monitoring and emergency planning.

The G20’s financial watchdog said in a new report that global stablecoins—cryptocurrencies designed to maintain a fixed value against traditional currencies—have yet to be tested under severe market stress or an issuer’s insolvency. Meanwhile, national regulatory frameworks are advancing at different rates, creating uncertainty about how holders would recover their money if a stablecoin issuer failed.

The stablecoin market began 2025 with a capitalization of approximately $206 billion and has since expanded to $306 billion. Most of that value comes from tokens pegged to the U.S. dollar. Although stablecoins are largely used to transfer funds into and out of cryptocurrency investments, they could eventually support faster and less expensive payments, including international transactions, the FSB said.

“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,” FSB Chair Andrew Bailey wrote in an accompanying letter.

Multiple Issuers Could Complicate Crisis Management

The report highlighted additional vulnerabilities in multi-issuer arrangements, where affiliated companies issue the same stablecoin, share responsibility for its obligations and maintain reserve assets in separate jurisdictions.

If holders are permitted to redeem their tokens through any company within the group, a sudden wave of redemption requests could overwhelm one issuer even when sufficient reserves exist elsewhere. Transferring those assets across borders may become more difficult during a crisis, the FSB warned.

An issuer’s insolvency could also trigger legal uncertainty over which country’s bankruptcy rules should apply, potentially complicating efforts to establish creditors’ claims and return funds to token holders.

Trading Hours Could Put Stablecoin Pegs Under Pressure

Stablecoins can be traded around the clock, but the markets for assets backing them operate within specific trading hours. This mismatch could become a problem during a rush to redeem tokens.

If issuers cannot process redemptions quickly enough while selling reserve assets, a stablecoin could lose its intended peg, according to the report. However, the FSB noted that deep and liquid secondary markets may help restore the peg through arbitrage, as traders buy or sell tokens when their market prices diverge from their target values.

Large-scale redemptions could also force issuers to sell reserve assets and withdraw bank deposits, potentially transmitting market stress into the traditional financial system as firms and investors seek liquidity.

Limited Data Creates Cross-Border Oversight Challenges

The FSB also identified gaps in available data as an obstacle to effective supervision. Because cryptocurrency transactions often involve pseudonymous addresses, authorities may struggle to determine where stablecoin holders are located and which national jurisdiction applies to them.

To address these risks, the watchdog called for greater international information sharing, more comprehensive monitoring and coordinated plans for managing stablecoin distress or failure.

Although the FSB’s recommendations are not legally binding, member jurisdictions generally commit to implementing agreed standards through their domestic regulatory systems.

Bailey, who also serves as governor of the Bank of England, has previously warned that international efforts to coordinate stablecoin regulation have stalled. The latest report comes just days before G20 finance ministers and central bank governors are scheduled to meet on October 15.

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