FSB Report Flags Cross-Border Risks in Dollar-Dominated Stablecoins

The Financial Stability Board said Monday that global stablecoin arrangements can transmit stress across borders in ways that may be hard for any one national regulator to see or contain, underscoring how much of the market remains tied to the U.S. dollar. In a report delivered to G20 finance ministers and central bank governors, the body said the reach, structure and legal complexity of large stablecoins can create vulnerabilities that extend well beyond the crypto market itself.

The warning matters because stablecoins are no longer a niche corner of digital assets. The FSB said the market was worth about $300 billion as of mid-2026, roughly unchanged from a year earlier, and that 99% of the market by value was pegged to the U.S. dollar. That concentration does not mean every dollar-linked stablecoin poses the same risk, but it does mean that stresses in a market used across multiple jurisdictions could travel through a system still overwhelmingly anchored to one currency.

The note was published alongside a letter from FSB Chair Andrew Bailey ahead of a G20 meeting in Bangkok on 15 October. Bailey said the global financial system is changing quickly and still requires close international cooperation, with the stablecoin paper serving as the FSB’s latest effort to map where cross-border oversight may still be weak.

Dollar pegs still dominate the stablecoin market

In its report on global stablecoin arrangements, the FSB described stablecoins as an inherently cross-border and cross-sectoral issue. The group defines global stablecoins as arrangements with reach and use across multiple jurisdictions that could become systemically important in one or more of them. That definition matters because the report is not aimed at every small token project. It is focused on the subset of arrangements whose scale, interconnectedness or potential role in payments and savings could give them broader financial-stability significance.

The paper said stablecoins are still used mainly inside crypto-asset markets, especially as a source of liquidity for entering, exiting and trading digital assets. Even so, the FSB said the technology could offer broader economic uses over time, including faster, more transparent and lower-cost domestic and cross-border transactions. In some emerging market and developing economies, it said, stablecoins may also function as an alternative store of value and may support financial inclusion, which is one reason policymakers are not treating the sector solely as a speculative trading story.

At the same time, the report suggests that the market’s heavy dollar bias deserves attention in its own right. A stablecoin market in which almost all value references the U.S. dollar can have very different implications across jurisdictions. For users in the United States, a dollar peg may look like a familiar denomination. For authorities elsewhere, especially in countries with more fragile currencies or shallower domestic capital markets, widespread use of foreign-currency stablecoins can interact with capital flows, savings behavior and payment habits in ways that are harder to predict and police.

Cross-border structures can magnify stress events

A central theme of the report is that stablecoins do not behave like ordinary bank deposits, even when they promise a fixed value. The FSB noted that many stablecoins circulate as pseudonymous tokens that are globally accessible and easily transferable around the clock on secondary markets. By contrast, a bank generally has an account-based relationship with identified depositors and can manage withdrawals against a balance sheet it can see. A global stablecoin issuer may not know exactly who holds its liabilities, where those holders are domiciled or where redemption demand will surface first in a stress event.

That matters because reserve assets and legal claims often remain anchored in specific jurisdictions, while the tokens themselves can move internationally at any hour. The FSB said this mismatch could increase the speed and scale of selloffs if market participants lose confidence in a stablecoin’s ability to hold its peg. If redemption demand outruns the issuer’s ability to process it, pressures can spill into the traditional financial system through reserve-asset sales, bank-deposit withdrawals used to fund redemptions and foreign-exchange channels where stablecoins are used for cross-border transfers.

The report also singles out so-called multi-issuer structures, in which affiliated issuers share liability for one global stablecoin but hold separate reserves. In those arrangements, holders may be able to redeem with any affiliated issuer regardless of where the token was originally issued. That can create frictions in a stress event if redemption demand clusters at one entity while reserves are parked elsewhere. The FSB said rebalancing reserves and relying on secondary markets might help under normal conditions, but those mechanisms depend on market access, reserve mobility, information flows and coordination that may fail when confidence is weakest.

Beyond liquidity pressure, the paper points to broader legal and operational uncertainty. Insolvency could raise difficult questions about which national regime applies, what claims token holders actually have and how supervisors in different jurisdictions should coordinate. The FSB also warned that global stablecoins and the regulatory frameworks governing them remain largely untested in a severe stress or failure episode. That uncertainty, it said, can be compounded when issuers operate through complex cross-border corporate structures or choose more lightly regulated jurisdictions, creating room for regulatory arbitrage.

Emerging market and developing economies may face additional vulnerabilities. The FSB said foreign-currency stablecoins can intensify risks tied to currency substitution, bank disintermediation and capital-flow management, which means stablecoins could become systemically important at a lower level of use than they would in advanced economies. That point broadens the story beyond crypto trading volumes. For some jurisdictions, the concern is not simply whether a coin remains at par, but whether large-scale use of dollar-linked tokens starts to weaken monetary control or strain the domestic banking system.

Data gaps still limit oversight and monitoring

The report does not argue that regulators lack raw data altogether. Instead, it says the problem is that abundant stablecoin data is often difficult to interpret, compare and attribute. Public blockchains can reveal on-chain activity, but many transactions remain pseudonymous, and the infrastructure surrounding stablecoins can make it hard to identify the geography, purpose or ultimate economic owner behind the activity. Those limitations become more serious when authorities are trying to understand concentrations, cross-border flows or where redemption pressure might emerge.

The FSB said authorities currently rely heavily on private firms that compile and interpret stablecoin data using proprietary methods. Those firms can improve access, but they also create comparability and credibility problems because methodologies differ and are not always transparent. The report said the high volume and complexity of the data can require sophisticated infrastructure and technical expertise, which may be a significant challenge for some authorities, particularly in emerging markets.

To improve monitoring, the FSB said authorities may need to track the depth, liquidity and structure of secondary markets as well as the geographic distribution of holdings, redemptions and reserve assets. It highlighted three areas for further international work: better monitoring of cross-border vulnerabilities, stronger implementation of the FSB’s 2023 recommendations through cooperation and information sharing, and more information on how authorities and firms are planning for distress or failure of global stablecoin arrangements.

That agenda stops short of announcing a new global rulebook, but it does show where the FSB believes the weakest points are. The report is effectively a map of what supervisors still do not see clearly enough: who holds large stablecoin exposures, where legal responsibility sits across borders, how quickly redemptions could move through markets and whether existing national regimes would hold together under pressure. Those questions are likely to remain on the table when G20 finance ministers and central bank governors meet in Bangkok on 15 October.