Chair

Stablecoin

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The Financial Stability Board (FSB), a global financial watchdog, has outlined financial stability risks associated with artificial intelligence and regulatory concerns surrounding stablecoins.
In a letter published Monday, FSB Chair Andrew Bailey <a href="https://www.fsb.org/2026/10/fsb-chairs-letter-to-g20-finance-ministers-and-central-bank-governors-october-2026/" rel="noopener noreferrer nofollow">warned</a> that cross-border mechanisms for stablecoin oversight and crisis management “remain immature or are not yet developed.” In its 2025 review, the FSB <a href="https://cointelegraph.com/news/fragmented-regulations-limit-stablecoin-adoption-in-international-finance-wto-director" rel="noopener noreferrer nofollow">found</a> that 11 of 28 surveyed jurisdictions had finalized stablecoin regulatory frameworks.
He also urged G20 members to support the FSB’s newly finalized practices for responsible AI adoption in the financial sector.
“AI therefore requires our continued close attention alongside careful management by financial institutions,” Bailey wrote.
The FSB submitted the letter to Group of Twenty (G20) finance ministers and central bank governors ahead of their Thursday meeting. The G20 brings together the world’s major economies to coordinate financial policy and regulatory priorities.
<h2 id="stablecoin-risks-extend-to-traditional-financial-markets">Stablecoin risks extend to traditional financial markets</h2>
In a report accompanying the letter, the FSB warned that stablecoin runs could spill into traditional markets through forced sales of reserve assets and withdrawals of bank deposits. The watchdog also identified risks for multi-issuer stablecoins where redemption demand could concentrate on one issuer while reserves are held in different jurisdictions.
These concerns echo what regulators have previously raised. In 2025, European Central Bank (ECB) President Christine Lagarde <a href="https://cointelegraph.com/news/ecb-president-risks-non-eu-stablecoins" rel="noopener noreferrer nofollow">warned of similar redemption risks</a> involving stablecoins issued inside and outside of the European Union.&nbsp;
<h2 id="ai-safeguards-target-cybersecurity-and-third-party-risks">AI safeguards target cybersecurity and third-party risks</h2>
The FSB’s AI practices cover organization-wide governance, AI development and deployment, cybersecurity and third-party service risks. Bailey also warned that sophisticated cyber threats enabled by AI could undermine the resilience of critical financial institutions and market infrastructure.&nbsp;
Related: <a href="https://cointelegraph.com/news/tether-kazakhstan-central-bank-to-explore-tenge-stablecoin-and-asset-tokenization" rel="noopener noreferrer nofollow">Tether, Kazakhstan cenbank mull tenge stablecoin and asset tokenization</a>
The risks have similarly drawn regulatory attention. In July, European central bankers warned that advances in AI could <a href="https://cointelegraph.com/news/central-bankers-sound-alarms-over-agentic-ai-finance-risks" rel="noopener noreferrer nofollow">amplify market volatility</a> and cybersecurity threats.
In June, the FSB had <a href="https://www.fsb.org/2026/06/fsb-consults-on-sound-practices-for-the-responsible-adoption-of-artificial-intelligence-ai/" rel="noopener noreferrer nofollow">proposed</a> 12 practices for responsible AI adoption, before finalizing its guidance for the upcoming G20 meeting.
Magazine: <a href="https://cointelegraph.com/magazine/chinas-p2p-stablecoin-wallets-surge-43x-koreas-450b-crypto-economy-asia-express" rel="noopener noreferrer nofollow">China’s P2P stablecoin wallets surge 43x, Korea’s $450B crypto economy: Asia Express</a>

Global watchdog flags stablecoin risks, AI threats ahead of G20

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