G20 risk control institutions warn of significant gaps in cryptocurrency regulation, calling for global synchronized regulation and coordination.

The risk control and monitoring agency belonging to the Group of Twenty (G20) issued a warning on Thursday, stating that there is a "significant gap" among member countries in regulating the rapidly growing stablecoins and volatile cryptocurrencies such as Bitcoin that dominate the crypto market. This could potentially cause harm to global financial stability. The Financial Stability Board (FSB) is an institution established after the global financial crisis, which previously made a series of recommendations on cryptocurrency rules in 2023, aiming to align them with the mainstream global financial sector. FSB is a global financial regulatory institution established by the G20 in June 2009, headquartered in Basel, Switzerland, with the current chair being Andrew Bailey, Governor of the Bank of England. During the review and assessment on Thursday, FSB commissioners stated that although some positive progress has been made, the international implementation and coordination of specific rules are still too "fragmented, inconsistent, and insufficient to address the global nature of the cryptocurrency market with high global financial risks." After assessment, the institution believes that the financial market stability risks are "still limited," but with the soaring value of Bitcoin and other highly volatile cryptocurrencies, the value of the global cryptocurrency market doubled to $4 trillion in the past year, leading to an increase in global financial risks. The above statistics show that the global cryptocurrency market size almost doubled in the past year. "This is significant." FSB Secretary John Schindler said in an interview while addressing the concerns raised during the review. "These cryptocurrency assets can easily flow across borders, much more easily than other financial assets." Lack of Stablecoin Regulations The sudden surge in cryptocurrency market value this year can undoubtedly be attributed to U.S. President Donald Trump's pro-crypto stance. Schindler stated that with the increasing connection between cryptocurrencies and the traditional financial system, and stablecoins - a type of low-volatility cryptocurrency mostly pegged to the U.S. dollar - being more widely used by traders globally, closer monitoring is especially necessary. One key concern pointed out in FSB's report is the lack of comprehensive regulatory frameworks and reviews for stablecoin systems from underlying infrastructure to actual applications in almost any country. Although still smaller compared to the entire highly volatile cryptocurrency market dominated by Bitcoin, the stablecoin market grew nearly three-quarters in the past year to just under $290 billion. With the U.S. government already in place with rules expanding the application of stablecoins, this trajectory is expected to continue. FSB's review report examined the implementation of recommendations for high-volatility cryptocurrencies and stablecoins in 29 jurisdictions, including the U.S., EU, Hong Kong, and the UK, but the U.S. only participated in the assessment of stablecoins. El Salvador, home to the largest stablecoin Tether, did not participate. Schindler emphasized that even without El Salvador's input, this review and assessment are still valuable because FSB already understands the relevant regulatory risks. However, he stressed that all jurisdictions need better global regulatory cooperation and consistent coordination in the future. "We can all create frameworks, but if someone doesn't cooperate, doesn't help each other, things will become very challenging because these things - they are not bound by borders at all," he said in the interview. Bank of England Governor Andrew Bailey also stated this week that efforts will be increased in global policy responses to the emerging threats posed by the use of stablecoins and the private financial system on a global scale. Stablecoins - a form of digital currency supported by traditional assets such as the dollar - have seen a rapid increase in their scope of application in recent months, especially in the U.S. market. Some Wall Street analysts even predict their scale could expand to $2 trillion. Supporters view them as the blueprint for a global payment system of the 21st century, while others warn they may open new cracks in the financial system. Stablecoins are designed to maintain a stable value, usually pegged 1:1 to the dollar. In recent years, their use has skyrocketed, especially in facilitating fund transfers between cryptocurrencies like Bitcoin and Ethereum and in the accelerated penetration of cross-border financial services. Risk is "limited" but rising Back in 2022, with the collapse of the crypto trading empire FTX and the demise of the TerraUSD/Luna stablecoin, global financial market regulators were pushed to take action. Last week, the cryptocurrency market also experienced significant tensions, with the largest-ever crypto crash triggering nearly $20 billion in market liquidation last Friday. FSB's report listed eight recommendations, urging global jurisdictions to accelerate the implementation of comprehensive and globally consistent regulatory and review rules, and to enhance cross-border cooperation and coordination. These recommendations echo similar concerns raised by the EU securities regulators in April, suggesting that even seemingly insignificant small cryptocurrency markets could potentially become sources of larger problems for the global financial system. Schindler pointed out that despite countries having their own financial market regulatory systems, they may still be influenced by the activities of some cryptocurrency companies headquartered in offshore areas.