The Global Regulatory Gaps in Crypto
Since 2023, the Financial Stability Board has pushed a global framework for crypto-asset activities and global stablecoin arrangements, endorsed by G20 leaders and backed by an IMF-FSB policy roadmap. Yet, two years on, global regulatory gaps in crypto still loom large: inconsistent rules across jurisdictions, lagging stablecoin legislation, thin supervisory capacity, and limited, non-standardized data. In October 2025, the FSB’s thematic review concluded that implementation remains uneven and inconsistent, enabling regulatory arbitrage and creating channels for cross-border contagion especially through stablecoins and leveraged activities. Financial Stability Board+4Financial Stability Board+4Financial Stability Board+4
This article distills what the FSB actually recommends, why the global regulatory gaps in crypto persist, and how compliance leaders, policymakers, and market infrastructures can align with the framework. We’ll also map the IMF-FSB implementation roadmap, highlight interactions with FATF standards on financial crime, and present a practical action plan for exchanges, stablecoin issuers, and custodians. If you need a one-page summary for your board or a sprint plan for your legal and risk team, start with the checklists at the end—and keep the phrase global regulatory gaps in crypto top of mind as you assess your exposure.
The FSB’s Framework: What It Covers and What It Expects
The FSB’s 2023 global framework has two pillars
High-level recommendations for crypto-asset activities and markets, and
Specific recommendations for “global stablecoin arrangements.”
Both emphasize same-activity, same-risk, same-regulation, comprehensive oversight of services across the value chain, and robust cross-border cooperation among authorities.
Why this matters
Crypto services operate across jurisdictions with 24/7 liquidity, instantaneous settlement, and composable protocols. Without consistent rules, actors can shift operations to lighter regimes, an issue the FSB calls out directly. The 2025 review flags regulatory arbitrage, under-resourced supervision, and fragmented data as system-level weaknesses that heighten stress-event spillovers.
Where the Global Regulatory Gaps in Crypto Persist (2025 Snapshot)
Even after G20 endorsement, the FSB notes significant gaps in how countries have implemented the 2023 framework. Four stand out.
Stablecoin regulation lags
Many jurisdictions lack comprehensive legal regimes for issuance, reserve quality/segregation, redemption rights, recovery/wind-down, and governance despite the systemic potential of large fiat-pegged tokens.
Leverage and intermediation risks
Rules for lending/borrowing, rehypothecation, margining, and conflicts of interest are incomplete in several markets, leaving exposures opaque and amplifying liquidity risk during stress.
Supervisory capacity & data
Authorities report thin resources and limited, non-standard data. Without consistent reporting (on flows, reserves, related-party exposures), early-warning signals are weakened.
Cross-border coordination
With firms and protocols spanning multiple jurisdictions, inconsistent perimeter definitions and licensing pathways create compliance uncertainty and room for evasion. The IMF-FSB roadmap addresses this but requires faster execution and capacity-building beyond G20.
Context: The G20 welcomed the IMF-FSB synthesis paper and adopted the crypto-asset policy implementation roadmap in late-2023; the FSB published a status report in 2024.
What the FSB Recommends (Core Actions)
The FSB’s recommendations for closing the global regulatory gaps in crypto can be grouped into six practical themes
Apply “same activity, same risk, same regulation”
If a crypto service performs a function equivalent to traditional finance custody, payments, market-making apply comparable safeguards: licensing, prudential standards, segregation of client assets, and robust governance.
Comprehensive oversight across the value chain
Supervision should cover issuance, wallet/custody, trading, market data, lending/borrowing, staking, cross-chain bridges, and key third parties (e.g., oracles, cloud). Supervisors should assess group-wide risks, including affiliates and DAOs where relevant.
Strengthen stablecoin frameworks
The FSB’s stablecoin recommendations require: high-quality, liquid reserves; daily reconciliation and independent assurance; robust redemption rights at par; transparency; recovery/wind-down plans; and governance that identifies accountable entities in multi-party arrangements.
Bolster data, disclosures, and reporting
Consistent templates (on reserves, flows, leverage, concentration, and related-party exposures) enable cross-jurisdiction comparability and better stress surveillance. The 2025 review spotlights data gaps as a priority fix.
Enhance cross-border cooperation and crisis management
MoUs, supervisory colleges, and information-sharing protocols should include crypto-specific triggers and pathways for coordinated actions during stress events—especially for stablecoins with global footprints.
Align with adjacent standards (FATF, IOSCO)
AML/CFT implementation remains patchy and continues to enable illicit flows. FATF’s 2025 update reiterates low adoption rates. Market integrity recommendations from IOSCO complement the FSB approach for trading venues and intermediaries.
Case Study 1: Stablecoin Issuer From “Good” to “FSB-Grade”
Scenario
A USD-pegged stablecoin grows to multi-billion circulation across APAC, EMEA, and LATAM.
Gaps
Reserve assets held in a single banking group; limited public attestation; T+2 redemption; opaque governance.
FSB-aligned upgrade
Split reserves across multiple highly rated custodians, daily reconciliation, and monthly independent assurance.
Real-time public reserve dashboard; legal opinions in major markets on redemption rights at par.
Hard limits on unsecured exposures; automated intraday liquidity buffers.
Pre-agreed recovery and wind-down plan filed with lead supervisors.
Outcome
Measurably lower run-risk, clearer user rights, and smoother cross-border licensing a blueprint for addressing global regulatory gaps in crypto around stablecoins.
Case Study 2: Exchange/Lender Turning Down Leverage Risk
Scenario
A vertically integrated exchange offers margin and perpetuals; a related entity runs a lending desk.
Gaps
Related-party exposures, opaque internal market-making, weak segregation, non-public stress metrics.
FSB-aligned upgrade
Ring-fence client assets; independent board risk committee; conflict-of-interest policies for affiliates.
Public, standardized risk disclosures (VaR limits, liquidation waterfalls, insurance fund health).
Transparent margin models; calibrated leverage caps; routine scenario testing with independent review.
Outcome
Reduced contagion pathways and improved comparability for supervisors—directly targeting global regulatory gaps in crypto around leverage and intermediation.
The IMF-FSB Roadmap: Who Does What, and When
The roadmap organizes workstreams to promote implementation, build institutional capacity beyond G20, and enhance cross-border coordination. For firms, it translates into clearer expectations and faster convergence of licensing regimes; for authorities, it provides coordinated timelines, technical assistance, and monitoring. Use it to sequence your own compliance program and anticipate supervisory asks.
FATF and Market Integrity: The Missing Half
Even the best prudential rules fall short if AML/CFT implementation lags. FATF’s June 2025 stock-take shows limited progress: only a minority of jurisdictions are largely compliant with virtual asset standards, with travel rule gaps and patchy supervision of VASPs. This undermines the FSB’s stability goals and widens the global regulatory gaps in crypto by enabling cross-border illicit flows and sanctions evasion. Firms should hard-wire travel-rule interoperability and sanction-screening across off- and on-chain rails.
Practical Checklist: How Firms Can Align Now
Map activities vs. FSB functions; identify where “same activity, same risk” implies higher standards.
Stabilize stablecoins
Reserve quality, independent assurance, clear redemption mechanics, recovery/wind-down.
Leverage discipline
Transparent margin models; hard leverage caps; liquidation waterfall disclosures.
Data readiness:
Implement standardized, regulator-ready templates (reserves, flows, related-party exposures).
Cross-border governance:
Designate a lead supervisor; adopt MoU-ready information-sharing packs aligned to the IMF-FSB roadmap.
AML/CFT uplift
Travel-rule compliance, sanctions screening, typology-based monitoring; evidence alignment to FATF guidance.
Policy Priorities: What Authorities Can Do in the Next 12 Months
Legislate stablecoin regimes with clear definitions, perimeter tests, reserve rules, governance, and resolution powers.
License and supervise by function, including custody, trading, lending, staking, and key third parties.
Stand up data standards for disclosures and regulatory reporting, harmonized across borders.
Build capacity beyond G20 via the IMF-FSB roadmap; share playbooks with emerging markets.
Tighten AML/CFT by fully implementing FATF’s crypto standards and enforcing the travel rule.
Concluding Remarks
FSB’s message is clear: despite progress since 2023, the global regulatory gaps in crypto remain material especially for stablecoins, leverage, and cross-border oversight. The IMF-FSB roadmap is the coordination layer; FATF is the integrity layer; and IOSCO provides market-conduct guardrails. For policy teams and firms, the path forward is practical and near-term: legislate and license by function, harden stablecoin regimes, standardize data, and deepen information-sharing.
Teams that move early will de-risk authorization journeys, reduce supervisory friction, and unlock institutional partnerships. Those who delay will find compliance costs rising as standards converge. If you’re planning budgets or board updates, build to the FSB blueprint now and treat global regulatory gaps in crypto as a solvable execution problem, not an intractable policy debate.
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Need a one-page board brief or a regulator-ready implementation plan? Use the checklists above or ask for a customized gap-assessment mapped to your jurisdiction.
FAQs
Q1 : How do the FSB’s 2023 recommendations change what crypto firms must do?
A : They establish global expectations: same-activity/same-risk rules, comprehensive oversight across the value chain, and specific standards for global stablecoins (reserves, redemption, governance, recovery). Jurisdictions are expected to translate these into licensing and supervision.
Q2 : How are “global regulatory gaps in crypto” measured?
A : Through FSB peer reviews and G20 status reports, which compare national rules and supervisory practices against the 2023 framework and the IMF-FSB roadmap milestones. The 2025 review highlights uneven implementation.
Q3 : How can stablecoin issuers meet FSB expectations quickly?
A : Upgrade reserves to high-quality/liquid assets, institute independent assurance, offer clear redemption at par, publish granular disclosures, and formalize recovery/wind-down plans.
Q4 : How do FATF standards intersect with FSB rules?
A : FATF covers AML/CFT and the travel rule; the FSB covers financial stability. Both must be implemented for a resilient crypto ecosystem. 2025 FATF updates show uneven adoption.
Q5 : How does IOSCO fit in?
A : IOSCO offers market-integrity guidance for trading venues and intermediaries, complementing the FSB’s stability focus.
Q6 : How should exchanges address leverage risk?
A : Cap leverage, disclose margin models and liquidation waterfalls, ring-fence client assets, and publish stress metrics aligning with FSB expectations.
Q7 : How can regulators reduce data blind spots?
A : Mandate standardized templates for reserves, flows, related-party exposures, and leverage; enable cross-border data sharing under MoUs.
Q8 : How can emerging markets keep up with the roadmap?
A : Leverage IMF technical assistance and the IMF-FSB roadmap; prioritize perimeter definitions and licensing for custody, trading, and stablecoins.
Q9 : What’s the timeline for closing the gaps?
A : Depends on national legislative cycles, but the FSB urges accelerated action; G20 monitoring continues via roadmap status updates.