The Financial Stability Board (FSB), the G20’s top financial risk regulator, has warned that major gaps persist in global cryptocurrency regulation, raising concerns that unchecked growth in digital asset markets could pose risks to financial stability.
In its review published Thursday, the FSB said that while progress has been made since its 2023 recommendations, regulatory frameworks remain “fragmented, inconsistent, and insufficient” to address the cross-border nature of crypto markets. The watchdog found that financial stability risks from crypto are limited for now, but are rising sharply as the global crypto market has doubled to $4 trillion over the past year, driven by surging bitcoin prices and a wave of new investors.
“These crypto assets can move across borders very easily, much more easily than other financial assets,” said John Schindler, the FSB’s secretary general, calling for stronger global cooperation.
One of the key weaknesses identified was the lack of clear and comprehensive rules for stablecoins, digital tokens typically pegged to the U.S. dollar. The market for stablecoins has grown by nearly 75% over the past year, reaching $290 billion, yet few countries have introduced complete regulatory frameworks.
The report examined 29 jurisdictions — including the U.S., EU, Hong Kong, and the UK — but noted uneven implementation and limited coordination, especially with countries such as El Salvador, which did not participate despite being home to Tether, the world’s largest stablecoin.
The FSB urged governments to accelerate rule-making and improve cross-border cooperation, warning that non-aligned jurisdictions could create regulatory blind spots. “Even if countries have their own rules, crypto companies operating offshore can still affect their markets,” Schindler said.
The warning follows recent market turbulence, including the largest crypto crash in history last week that triggered nearly $20 billion in liquidations, reviving fears of contagion risks.