Gaps in stablecoin regulation threaten stability, G20 said

On October 16th, 2025 the Financial Stability Board warned that fragmented global crypto regulation and gaps in stablecoin rules could threaten financial stability.

What are the g20 crypto regulation gaps identified by the FSB?

The FSB review found “significant gaps” in how countries translate agreed standards into national law. It examined 29 jurisdictions, including the US, EU, Hong Kong and the UK, and highlighted uneven timelines and inconsistent scope of rules.

The watchdog noted the crypto market roughly doubled to about $4 trillion over the past year while stablecoins rose about 75% to nearly $290 billion, raising contagion risks. John Schindler, the FSB secretary general, urged faster, coordinated implementation.

Tip: Prioritise interoperability and mutual information-sharing to reduce regulatory arbitrage and systemic spillovers.

How do cross border crypto rules affect enforcement?

Cross-border misalignment complicates supervision and emergency responses. Firms can exploit divergent licensing, custody or disclosure rules across jurisdictions, amplifying enforcement challenges.

As the FSB report noted, “fragmented approaches across jurisdictions could amplify financial stability risks” — a point made in the official review.

In brief: The FSB says gaps persist across major economies, weakening enforcement in key areas and increasing the chance of cross-border shocks.

How does a weak stablecoin regulation increase financial stability crypto risks?

Stablecoin design and backing standards remain patchy in many countries, the FSB found. Past failures such as FTX and the TerraUSD/Luna collapse in 2022 show how runs can propagate through crypto markets.

The report sets out eight recommendations — from custody standards to disclosure and resolution planning — to raise resilience. Recent market stress triggered roughly $20bn of liquidations in a single episode, underscoring rising vulnerabilities.

Note: Clear reserve requirements and regular third-party attestations are practical steps to limit run risk and improve trust.

In brief: Without a coherent stablecoin regulatory framework implemented promptly, spillovers from isolated failures could pose broader market risks as the sector grows.

What steps will close g20 stablecoin regulation gaps and improve implementation of crypto rules?

Policymakers face political timelines, resource constraints and differing legal frameworks that slow adoption. Smaller jurisdictions often lag, which undermines global coordination and complicates unified responses.

Tip: Coordinated timelines, technical assistance and mutual-recognition arrangements can accelerate consistent adoption and close fragmentation gaps.

Which measures support implementation of stablecoin regulation?

Practical measures include data-sharing agreements, aligned AML/KYC standards and phased implementation with clear milestones. The FSB also emphasised cross-border cooperation to enable swift supervisory action.

As Reuters reported, Schindler warned that “these crypto assets can move across borders very easily, much more easily than other financial assets”

In brief: Effective follow-through — including clear mandates, resource allocation and international cooperation — will determine whether reforms close the identified gaps or leave markets exposed.

Further reading: analysis of the FTX collapse is available on cryptonomist.ch and coverage of proposed stablecoin rules HERE.