Financial Stability Board warns of stablecoin insolvency risks

The Financial Stability Board (FSB) has released a report highlighting significant cross-border insolvency risks within the stablecoin market. The report notes that global stablecoins have yet to be tested under conditions of severe stress or insolvency, creating a potential gap in investor protection.

With stablecoin capitalization growing from approximately $206 billion at the start of 2025 to $306 billion, the FSB expressed concern over the uneven development of national regulations. FSB Chair Andrew Bailey, who also serves as Governor of the Bank of England, noted that while stablecoin arrangements are international by nature, regulatory cooperation between jurisdictions remains in the early stages.

A specific technical concern involves multi-issuer structures, where affiliated companies issue the same stablecoin and share liability. In these cases, reserve assets may be held across different jurisdictions, complicating fund recovery if a major issuer fails.