FSB warns cross-border stablecoin rules remain untested in a severe market crisis

The report points to higher risks in so-called multi-issuer structures. Affiliated companies can issue the same stablecoin and share liability for it while keeping reserve assets in separate jurisdictions.

If holders can redeem with any issuer in the group, demand could pile up on a single entity, while the needed assets sit elsewhere. Moving those reserves may become harder during a crisis, the FSB warned. Legal claims could also become unclear if an issuer fails, as it It may be difficult to determine which country’s insolvency rules would apply.

Stablecoins can trade around the clock, while the markets for assets backing them have set operating hours. That mismatch could matter during a run because if redemptions cannot keep pace with selling, a token may lose its peg, the report added.

However, the FSB noted that deep, liquid secondary markets could also help pull a token back toward its peg through arbitrage.

Forced reserve sales and bank deposit withdrawals could then spread the shock into traditional financial markets as investors scramble for liquidity.

The FSB also pointed to weak data as a problem, as the pseudonymous nature of cryptocurrency transactions can make it hard to tell where holders are based and which jurisdiction applies.