The Financial Stability Board (FSB), the global body tasked with monitoring risks to the international financial system, has warned that stablecoins could pose stability threats that spill beyond crypto markets. In a letter sent to the Group of Twenty (G20) ahead of its finance ministers and central bank governors meeting, FSB Chair Andrew Bailey also urged policymakers to keep a close eye on the financial-sector risks tied to artificial intelligence.

Bailey said cross-border arrangements for stablecoin oversight and crisis response are still “immature or are not yet developed.” Separately, the FSB’s updated guidance on AI adoption for financial institutions focuses on governance, cybersecurity and third-party risk—areas the watchdog says are increasingly relevant as AI capabilities grow.

Key takeaways

FSB Chair Andrew Bailey warned that cross-border stablecoin supervision and crisis-management frameworks are not yet fully developed.
In the FSB’s 2025 review, only 11 of 28 surveyed jurisdictions had finalized stablecoin regulatory frameworks.
The FSB cautioned that stablecoin “runs” could trigger forced sales of reserve assets and deposit withdrawals in traditional markets.
FSB AI practices emphasize organizational governance, cybersecurity and third-party risks, including threats enabled by advanced cyberattacks.
The letter was submitted to G20 officials ahead of their Thursday meeting and pairs stablecoin concerns with renewed AI-risk guidance.

Stablecoin oversight gaps remain a central concern

In the letter published Monday, Bailey highlighted a regulatory mismatch across countries: mechanisms to supervise stablecoins across borders and coordinate crisis responses are not sufficiently mature, according to the FSB. That matters because stablecoin issuers, reserve assets, and intermediaries often operate across multiple jurisdictions—creating complex legal and operational questions during periods of stress.

The FSB’s 2025 review found that stablecoin regulation is progressing unevenly. It reported that 11 of 28 surveyed jurisdictions had finalized stablecoin regulatory frameworks. While that suggests some movement, it also underscores that many major markets remain in earlier stages—potentially leaving gaps in how redemption requests, reserve transparency expectations, and failure-response processes are handled.

Bailey’s message to the G20 therefore has a policy focus: countries should support the FSB’s “newly finalized practices” for responsible AI adoption in finance, while also addressing stablecoin oversight shortfalls that could worsen during market disruptions.

Why stablecoin stress could spill into traditional markets

The FSB paired its letter with an accompanying report warning that stablecoin instability could transmit into conventional financial systems. A key channel, the watchdog said, is the risk of “runs” on stablecoins—events where redemption demand rises quickly.

In that scenario, the FSB warned that reserve assets could be sold under pressure to meet redemptions, potentially affecting broader markets. It also pointed to the possibility of bank deposit withdrawals, where stress around stablecoin holders or issuers coincides with shifts in where users park cash.

The report also drew attention to a specific structural issue for multi-issuer stablecoins: where redemption demand concentrates on one issuer while reserves are held in different jurisdictions. That mismatch can complicate timing, liquidity management, and legal recourse, which becomes more acute when market conditions deteriorate.

These stability concerns are consistent with earlier warnings from European officials. In 2025, European Central Bank President Christine Lagarde warned about redemption-related risks tied to stablecoins issued both inside and outside the European Union, as noted in earlier coverage by Cointelegraph (see here).

AI risk guidance targets governance, cyber threats and third parties

Alongside stablecoin questions, the FSB letter emphasized that financial institutions need strong safeguards for AI use. The FSB’s AI practices cover organization-wide governance, AI development and deployment, cybersecurity controls, and risks related to third-party service providers.

Bailey also warned that sophisticated cyber threats enabled by AI could weaken the resilience of critical financial institutions and market infrastructure. That risk framing matters for investors and market participants because it shifts the focus from AI as a general technology trend to AI as a factor that can magnify operational vulnerabilities—particularly in systems where downtime, compromise, or disruptions can rapidly become financial-system risks.

Regulators have raised similar concerns about AI’s potential to worsen volatility and cyber exposure. In July, European central bankers warned that advances in AI could amplify market volatility and cybersecurity threats, as covered by Cointelegraph (see here).

The FSB’s AI work also follows a clear policy progression. Earlier, the board proposed “12 practices” for the responsible adoption of AI in June before finalizing its guidance for an upcoming G20 discussion, according to the FSB’s announcement (see FSB consultation).

What investors and builders should watch next

The FSB’s dual message—stablecoin supervision remains fragmented, while AI introduces new operational and cyber risks—suggests policymakers are increasingly treating crypto and AI as intertwined sources of financial stability exposure rather than as separate regulatory tracks. With the G20 meeting approaching and the FSB guidance finalized, market participants should watch for follow-on implementation steps, especially around cross-border coordination for stablecoin crisis management and the practical adoption of AI safety practices in financial firms.