Fragmented global crypto regulation increases the risk that market shocks from stablecoins and DeFi could spill across borders; coordinated rules on licensing, reserves and redemption are needed by 2026 to protect global financial stability.
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FSB warns fragmented rules can undermine global financial stability
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Only a handful of jurisdictions have fully implemented the 2023 FSB recommendations; progress is uneven.
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Global stablecoin supply totals about $302 billion; the FSB calls 2026 a “critical deadline” for harmonized oversight.
Global crypto regulation faces fragmentation; COINOTAG explains FSB findings and actions needed by 2026 to safeguard markets — read the implications and next steps.
Published: 16 October 2025 · Updated: 16 October 2025 · By COINOTAG
How does fragmented global crypto regulation threaten global financial stability?
global crypto regulation is currently uneven across major jurisdictions, and the Financial Stability Board (FSB) warns that this fragmentation could let risks from stablecoins and decentralized finance spread across borders. The FSB’s 16 October 2025 thematic review notes limited implementation of its 2023 recommendations and urges accelerated coordination to limit systemic spillovers.
What are the FSB’s main concerns and recommendations?
The FSB cautioned that inconsistent rules on licensing, reserve backing, redemption-at-par, and supervision could create regulatory arbitrage and concentration risks. The review highlights these practical priorities:
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Licensing and supervision: Authorities should require clear licensing regimes for issuers and custodians to ensure legal accountability.
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Reserve quality and transparency: Stablecoin reserves should be high-quality liquid assets with regular attestations or audits to ensure backing.
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Redemption-at-par: Consumers must have reliable redemption mechanisms; the FSB stresses enforceable redemption rules to avoid runs.
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Cross-border cooperation: The FSB urges common reporting and supervisory cooperation to manage cross-jurisdiction exposures.
The report cites the $302 billion global stablecoin stock and growing DeFi activity as evidence that retail and institutional linkages to traditional finance are increasing, reinforcing the need for harmonized rules. Authoritative frameworks referenced in the review include regional and national efforts such as MiCA (European Union), the U.S. GENIUS Act, the Monetary Authority of Singapore (MAS) rules, Japan’s Payment Services Act, and regulatory regimes in Switzerland and Hong Kong. These references are presented as plain text in line with publication rules.
Frequently Asked Questions
Which countries have implemented full frameworks for crypto oversight?
As of the FSB’s 16 October 2025 review, only five jurisdictions have enacted comprehensive frameworks consistent with the FSB’s 2023 recommendations. Another ~20 jurisdictions are expected to align with these standards by the end of 2026, though the pace and substance of implementation vary.
What should policymakers do to reduce cross-border crypto risks?
Policymakers should adopt consistent licensing, require high-quality reserve assets with monthly attestations, mandate redemption-at-par protections, and establish formal supervisory cooperation protocols—steps the FSB explicitly recommends to limit contagion.
Key Takeaways
- Fragmentation poses systemic risk: Uneven rules create channels for regulatory arbitrage and cross-border spillovers between crypto and traditional finance.
- Action required by 2026: The FSB identifies 2026 as a “critical deadline” to close gaps and harmonize oversight globally.
- Practical steps for supervisors: Implement licensing, enforce reserve and redemption standards, increase transparency, and formalize cross-border cooperation.
Conclusion
The FSB’s 16 October 2025 thematic review makes clear that without accelerated, coordinated action the current patchwork of global crypto regulation could amplify systemic risks as stablecoins and DeFi integrate further with traditional finance. COINOTAG recommends that authorities prioritize licensing clarity, reserve transparency, redemption guarantees, and cross-border supervisory arrangements before the 2026 deadline to protect market integrity and consumer confidence.
Authoritative sources referenced: Financial Stability Board (FSB) thematic review (16 October 2025), European Commission (MiCA), U.S. GENIUS Act, Monetary Authority of Singapore (MAS), Japan Payment Services Act, IMF and central bank coordination (referenced as plain text).
