The Financial Stability Board (FSB), which advises the G20 on global financial risks, has warned that fragmented and inconsistent crypto regulations could threaten future financial stability as digital assets become more intertwined with the traditional financial system.
In a report released Thursday, the FSB said most countries have yet to fully implement the crypto and stablecoin frameworks it recommended last year. Despite modest progress, international oversight remains weak, creating what the board called “significant regulatory gaps.”
The FSB noted that while crypto-related risks remain “limited at present,” they are increasing as the value of the global market has doubled to $4 trillion over the past 12 months. Secretary General John Schindler told Reuters that stronger cross-border collaboration is urgently needed: “We can all put in place frameworks, but if there are people who are not cooperating, it’s going to be really challenging because these things don’t observe borders.”
The report found that hardly any countries have complete stablecoin regulations, even as the sector grows rapidly, now valued near $290 billion. The FSB reviewed 29 jurisdictions, including the U.S., EU, UK, and Hong Kong, but noted that El Salvador — home to Tether’s registration — did not participate.
Recent turmoil, including the massive crypto market crash last week that erased $20 billion, has added urgency to global efforts. The FSB issued eight recommendations urging countries to speed up rule implementation and enhance cross-border enforcement.
The warning follows similar concerns from the European Securities and Markets Authority, which in April cautioned that even small crypto markets could trigger broader financial instability if left unchecked.
