FSB Warns Stablecoins Could Create New Risks for FX Markets

The Financial Stability Board (FSB) has warned that the growing use of stablecoins for cross-border transactions could create financial stability risks extending into traditional foreign exchange markets, particularly as their global reach complicates regulatory oversight and liquidity management.

In a report published on Monday, the FSB said the stablecoin market was worth approximately $300 billion as of mid-2026, largely unchanged from a year earlier, with 99% of its value pegged to the US dollar.

While stablecoins remain predominantly a source of liquidity for trading crypto-assets, the FSB acknowledged their potential to facilitate faster, cheaper and more transparent cross-border payments. However, it cautioned that their ability to circulate globally, around the clock, introduces risks not typically associated with traditional financial assets.

One concern is the mismatch between continuous secondary-market trading and the operating hours of the conventional financial system. Stablecoins can be transferred and sold 24/7, but the assets backing them remain subject to traditional market hours and settlement arrangements.

During periods of stress, this mismatch could accelerate selling pressure and undermine stablecoin pegs if issuers cannot meet redemption demand quickly enough. The FSB warned that a run could spill into conventional markets through forced sales of reserve assets, withdrawals of bank deposits and disruptions to FX markets where stablecoins facilitate cross-border transactions.

The report also highlighted vulnerabilities associated with multi-issuer stablecoin arrangements, where affiliated entities issue the same token but maintain separate reserves. Redemption demand could become concentrated in one jurisdiction, creating difficulties in moving liquidity between entities when markets are under pressure.

For emerging economies, the FSB identified additional concerns around currency substitution, bank disintermediation and capital flow management, suggesting stablecoins could become systemically important at relatively low levels of adoption.

The FSB also acknowledged significant gaps in regulators’ ability to monitor stablecoin activity. Although blockchain transactions generate substantial amounts of data, pseudonymity and inconsistent reporting methodologies make it difficult to establish where tokens are held, how they are used and where cross-border flows originate.

It called for stronger international cooperation, improved monitoring of stablecoin liquidity and geographic exposures, and further work on managing the potential failure of global stablecoin arrangements.

The findings underline a growing challenge for FX market participants and regulators: as stablecoins become more integrated into cross-border payments, liquidity and settlement, vulnerabilities originating in digital asset markets could increasingly transmit into traditional currency markets.