Financial Stability Board warns of untested stablecoin risks in crises

The Financial Stability Board has a message for the G20: nobody actually knows how a major stablecoin would behave if it hit serious trouble. On October 12, 2026, the global watchdog published a note warning that crisis-management frameworks for global stablecoin arrangements remain largely untested under severe stress or insolvency. The note, titled ‘Global stablecoin arrangements: Cross-border vulnerabilities and financial stability monitoring,’ landed alongside a letter from FSB Chair Andrew Bailey addressed to G20 finance ministers and central bank governors. What the FSB actually flagged The core problem is structural. Global stablecoins operate across borders and across sectors, but the rules meant to oversee them mostly stop at national lines. The FSB found significant gaps in existing regulatory, supervisory, and crisis-management frameworks. Those gaps raise questions about how these arrangements would hold up if things went badly wrong. The watchdog singled out one design in particular: multi-issuer structures. In these setups, affiliated entities issue the same token, but each keeps its reserves in a different jurisdiction. The FSB named Circle’s USDC and Paxos Global Do...