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Gaps in the implementation of the Financial Stability Board’s (FSB) recommendations are creating compliance challenges and legal uncertainty, as well as permitting regulatory arbitrage and weakening global oversight.
In a published in October 2025, the FSB highlighted significant regulatory gaps and inconsistencies in how countries are implementing its global framework for crypto-assets and stablecoins.
It warned that these shortcomings could undermine financial stability and the development of a resilient digital asset ecosystem.
The board noted that although jurisdictions have made progress in bringing crypto-asset activities under regulatory oversight, the implementation of rules for global stablecoin arrangements (GSCs) is proceeding more slowly.
Even where frameworks exist, alignment with FSB recommendations remains limited, particularly in areas relating to stablecoin governance and oversight of crypto-asset service providers (CASPs).
“Implementation progress remains incomplete, uneven and inconsistent. This creates opportunities for regulatory arbitrage and complicates oversight of the inherently global and evolving crypto-asset market”, said Arthur Yuen, deputy chief executive of the Hong Kong Monetary Authority (HKMA) and chair of the team that prepared the report.
The review evaluates progress across FSB jurisdictions and several volunteer non-members as of August 2025, assessing the extent to which countries have implemented the FSB’s 2023 recommendations covering CASPs, stablecoin arrangements, data reporting and cross-border cooperation.
The uneven and inconsistent implementation of the FSB’s recommendations potentially leaves stablecoin issuers and CASPs facing a fragmented global regulatory landscape.
Firms operating across borders need to navigate overlapping or conflicting rules, such as classification as payment providers in one jurisdiction, securities issuers in another or remaining unregulated elsewhere.
As much as it means there are gaps in the strictness of different jurisdictions, it also creates significant compliance challenges and legal uncertainty.
Stablecoin progress is poor
The FSB singled out the slow implementation of its global stablecoin recommendations for criticism, noting that only five of the reviewed jurisdictions have finalised stablecoin frameworks.
In addition, ten are consulting on or finalising rules, three have partial regulations, and 11 remain at an early stage with no framework.
This lag in regulatory development leaves gaps in oversight of a sector that continues to grow rapidly across borders, the FSB warned.
Better outlook for crypto generally
The FSB’s review is more positive towards crypto-asset frameworks, suggesting that jurisdictions have made progress in developing regulatory frameworks for crypto-asset activities, reflecting growing recognition of associated financial stability risks.
Of the jurisdictions reviewed, 39 percent have finalised such frameworks, 29 percent are in consultation or finalisation stages, 11 percent have partial measures and 21 percent are still in the early stages.
Implementation varies widely due to differences in legal systems, institutional capacity and policy priorities. Jurisdictions have generally followed a sequential approach: beginning with anti-money laundering/counter-terrorism financing (AML/CTF) rules, then moving on to consumer and market integrity measures and only later addressing financial stability risks in full.
According to the FSB, two main regulatory approaches have emerged for regulating crypto-assets. The first extends existing financial sector rules to crypto-assets, a model deployed in jurisdictions such as Australia, Japan, Singapore and South Africa, aligning CASPs with the treatment of traditional financial intermediaries.
The second introduces bespoke frameworks tailored to crypto-asset characteristics, as seen in the EU, Bermuda, the Bahamas, Chile, Indonesia and Thailand. These regimes often include specific prudential, governance, and risk management standards.
Some countries, including China and Saudi Arabia, have opted to prohibit crypto-asset activities altogether.
The EU’s Markets in Crypto-Assets (MiCA) regulatory framework stands out as the most comprehensive, bespoke framework, though implementation across member states remains uneven.
Bermuda and the Bahamas also have advanced frameworks with risk-based supervision.
Across most jurisdictions, regulation has so far focused on CASP activities such as custody, trading and asset management. The issuance of crypto-assets other than stablecoins remains largely unregulated, a gap noted by the FSB as potentially significant for financial stability.
Next steps
The review urges jurisdictions to prioritise full and consistent implementation of the framework to reduce the risk of regulatory arbitrage and strengthen global oversight of crypto markets.
It also calls for enhanced coordination among regulators, highlighting that fragmented approaches may hinder effective cross-border supervision.
The FSB first published its global regulatory framework for crypto-asset activities in July 2023, setting out high-level recommendations for the regulation, supervision and oversight of both crypto markets and global stablecoin arrangements.
The board, which coordinates financial stability policies among 24 member jurisdictions and works closely with international standard setters, will continue to monitor progress and promote consistent global implementation.
