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FSB Calls for Cross-Border Stablecoin Information Sharing
The Financial Stability Board (FSB), a global financial watchdog, has issued a report warning that stablecoins, digital tokens pegged to fiat currencies, could expose gaps in cross-border financial rules during a market crisis. The FSB, in a recent report, highlighted that stablecoins have not been tested under severe stress or insolvency, and national regulatory frameworks are developing at different speeds. This has raised questions over how holders would recover their funds if an issuer goes under. The FSB called for more cross-border information sharing, monitoring, and planning for stablecoin distress or failure, emphasizing the inherent cross-border nature of stablecoins and the need for better cooperation between jurisdictions. The report also pointed out potential risks in multi-issuer structures, where affiliated companies can issue the same stablecoin and share liability for it while keeping reserve assets in separate jurisdictions, complicating cross-border crisis response. The FSB recommended more cross-border information sharing, monitoring, and planning to address these issues, noting that the pseudonymous nature of cryptocurrency transactions can make it difficult to track where holders are based and which jurisdiction applies. The FSB’s recommendations are not legally binding, but members tend to commit to putting agreed standards into practice nationally.