UPDATE: FSB warns USDC and USDG face untested crisis frameworks in $300B market
CIE News ·
The FSB warned that crisis frameworks for stablecoins like Circle's USDC and Paxos's USDG remain untested, urging G20 leaders to enforce oversight across the $300 billion sector.
On October 12, 2026, the Financial Stability Board published a report warning that crisis-management frameworks for multi-issuer stablecoins remain untested in severe stress and insolvency. As previously reported, the watchdog identified stablecoin and artificial intelligence risks for the G20, and the new release details specific vulnerabilities in the approximately $300 billion market, where 99% of assets are pegged to the U.S. dollar.
According to ledgerinsights.com, the publication and an accompanying letter from FSB Chair Andrew Bailey specifically named Circle's USD Coin (USDC) and Paxos's Global Dollar (USDG), which issue tokens across multiple jurisdictions. The guidance noted that cross-border redemptions can shift rapidly and evade tracking, while regulatory discrepancies risk channeling redemptions toward single regions during stress events. The regulator also highlighted contagion risks stemming from the mismatch between continuous 24/7 crypto trading and standard banking hours for reserve assets.
Bailey urged G20 finance ministers and central bank governors to accelerate the implementation of the FSB's 2023 crypto recommendations ahead of the October 15, 2026, finance meeting. The watchdog called for improved data quality, enhanced cross-border supervisory coordination, and deeper research into handling potential stablecoin failures.