The G20's risk regulatory body issued a warning on Thursday about “significant gaps” in how countries regulate the rapidly evolving cryptocurrency market, a situation that could pose risks to financial stability. The Financial Stability Board (FSB), established after the global financial crisis, provided a series of recommendations regarding cryptocurrency regulation in 2023 in an effort to incorporate the crypto market into the mainstream financial regulatory framework. In an assessment report published on Thursday, the FSB noted that while regulatory progress has been made, the international implementation and coordination of rules remain “fragmented, inconsistent, and insufficient to address the global nature of the crypto assets market.” The board assessed that current financial stability risks are “still limited,” but with the prices of Bitcoin and other cryptocurrencies soaring, the global cryptocurrency market size has doubled to $4 trillion in the past year, and associated risks are on the rise. “This situation can create a ripple effect,” said FSB Secretary General John Schindler in remarks to Reuters regarding the concerns outlined in the report. “These crypto assets can move across borders much more easily than other financial assets.” Incomplete Regulation Framework for Stablecoins The surge in the cryptocurrency market this year is occurring against the backdrop of support for cryptocurrencies from U.S. President Donald Trump. Schindler indicated that as the ties between cryptocurrencies and the traditional financial system grow stronger, and the use of stablecoins (most of which are pegged to the U.S. dollar) continues to expand, there is a need for closer monitoring. One of the core concerns emphasized in the FSB report is that almost no countries have established a comprehensive regulatory framework for stablecoins. Although the market for stablecoins is still smaller than that of Bitcoin-dominated cryptocurrencies, its size has increased by nearly three-quarters over the past year, reaching almost $290 billion. This upward trend is expected to continue with the implementation of relevant regulatory rules in the United States. The FSB's report evaluated the implementation of cryptocurrency and stablecoin regulatory recommendations across 29 jurisdictions, including the U.S., the EU, Hong Kong, and the UK. However, the U.S. only participated in the evaluation of the stablecoin-related components. El Salvador, the registration location of the world's largest stablecoin Tether, did not participate in this assessment. Despite El Salvador's absence, Schindler stated that the FSB's understanding of the relevant risks makes the latest assessment valuable. He also emphasized that all jurisdictions should enhance global cooperation and coordination in the future. “We can all establish regulatory frameworks, but if some are unwilling to cooperate or help each other, the following work will be highly challenging—because these crypto assets are inherently borderless,” he said. Current Risks “Limited” but Rising The bankruptcy of the cryptocurrency exchange FTX in 2022 and the collapse of the stablecoins TerraUSD/Luna prompted global regulators to take action. Market conditions remained tense over the past week: last Friday witnessed the largest cryptocurrency crash in history, triggering nearly $20 billion in liquidations. The FSB's report proposes eight recommendations urging jurisdictions to expedite the implementation of comprehensive and globally unified regulatory rules and enhance cross-border cooperation and coordination. Previously, EU securities regulators expressed similar concerns in April, stating that even small markets could become sources of greater risks to the financial system. Schindler noted that even if countries have their own regulatory systems, they can still be affected by the activities of cryptocurrency companies based overseas.