The Financial Stability Board says the $300 billion stablecoin market can still seize up in a stress event even when every token is fully backed. In an Oct. 12 report, the Basel-based body pointed to reserves that sit in one jurisdiction while redemption demand lands in another, and to settlement systems that can't keep pace with tokens that trade around the clock.
The warning lands three days before G20 finance ministers and central bank governors meet on Oct. 15, where the FSB wants cross-border coordination moved up the agenda.
Reserves aren't the whole story
Full backing has been the industry's answer to every bank-run comparison since 2022. The FSB's argument is narrower and harder to dismiss: backing only works if holders can actually get to it. Treasury bills and bank deposits settle on local market hours. Stablecoins don't. A token can cross three borders on a Sunday night while the collateral behind it sits in a custodian that won't open until Monday.
That gap is where a redemption queue forms. If it drags, the FSB says holders will head for secondary markets and sell at a discount, which is exactly how a dollar peg starts to wobble.
When one token has two issuers
The report flags a structure that's already live. Circle co-issues USDC through a French entity for the European Economic Area and a US entity for the rest of the world, each holding separate reserves. Circle's updated September redemption policy lets Circle France adjust or defer certain redemption requests during a defined stress event if the two entities can't rebalance reserves in time.
Nothing improper about the setup. The FSB's point is what it exposes: liability split across affiliates, collateral stranded in one jurisdiction, and redemption demand concentrating in another. A liquidity mismatch that looks technical on paper can turn into a queue outside the door of whichever entity holders think is on the hook.
Nobody knows where the tokens are
Issuers often can't say which wallets hold their tokens or where those holders sit. Blockchain addresses are pseudonymous, and the FSB notes that analytics firms use different methods to estimate activity, so geographic breakdowns are rough at best. That makes it hard to know which affiliate owes what in a wind-down. Differences in national insolvency law then decide which regulator gets to step in and how the remaining reserves get split. There is no mature playbook for any of this.
The FSB's 2025 assessment already found substantial gaps in how countries implemented its stablecoin recommendations, which gives issuers room to park operations in the lightest-touch jurisdictions they can find.
What the FSB actually wants
Three things: stronger information-sharing between national regulators, closer tracking of where stablecoins circulate and where reserves sit, and a coordinated way to handle a stablecoin failure or insolvency before it turns into a fire sale.
The measures build on the FSB's 2023 recommendations and are non-binding. National authorities decide whether to adopt them. Chair Andrew Bailey said international coordination remains underdeveloped, leaving regulators without the machinery to manage a cross-border stablecoin failure.
That's the tension heading into Oct. 15. The G20 can endorse the principles, but the FSB's own review says implementation is the weak link. Watch whether the communique moves past language about coordination and into anything with a deadline attached.
