Circle · France · Stability AI · CryptoSlate
Global watchdog warns the $300 billion stablecoin market could face bank runs even with full reserves
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The Financial Stability Board (FSB) warned that stablecoins could face redemption crises if, during market stress, reserves become inaccessible across borders.
Key facts
- The proposed measures build on the FSB's 2023 recommendations and are non-binding, leaving national authorities responsible for implementing any changes
- The Financial Stability Board (FSB) warned that stablecoins could face redemption crises if, during market stress, reserves become inaccessible across borders
- FSB Chair Andrew Bailey said international regulatory coordination remains underdeveloped, leaving authorities without mature arrangements for managing cross-border stablecoin failures
- The FSB's 2025 assessment found substantial gaps in countries' implementation of its global stablecoin recommendations, increasing opportunities for issuers to structure operations
Summary
01 The FSB warns that stablecoins could face redemption crises even when their total reserves are sufficient but spread across different countries. 02 Delays moving reserves between jurisdictions could trigger depegging, forced asset sales and broader financial-market stress. 03 Regulators will discuss the risks at the Oct. 15 G20 meeting, but coordinated cross-border crisis procedures remain undeveloped. In an Oct. 12 report, the global financial watchdog said stablecoin issuers operating through affiliated entities in different countries could struggle to meet concentrated withdrawal demands when their reserve assets are held elsewhere.