G20 Summit: Financial Watchdog Sounds Alarm on Stablecoins

Financial Stability Board (FSB) Chair and Bank of England Governor Andrew Bailey has issued a strong warning about the global rise of stablecoins, stating they could shift control of money creation from governments to private entities, jeopardizing monetary policy and financial stability. In a letter to G20 finance ministers, Bailey emphasized the urgent need to address stablecoin adoption, especially in emerging markets, as it threatens trust in sovereign currencies.

Bailey, who took over as FSB chair in July, urged global regulators to enforce existing rules and coordinate cross-border oversight, with the FSB planning to expand its focus on less-regulated economies. This warning comes as stablecoin settlement volumes soared to $27.6 trillion in Q1 2025, surpassing Visa’s annual transaction volume, pushing digital dollars into the mainstream.

Despite this growth and the advancement of the U.S. GENIUS Act to regulate stablecoins, Bailey remains skeptical of private stablecoin issuance. He advocates for digital bank deposits instead, arguing they preserve state control and the “singleness of money,” a foundational economic principle. He fears unregulated stablecoins could fragment the financial system and hinder policy enforcement during crises.

Ethereum, which powers the majority of stablecoins, recently broke past $3,000, buoyed by U.S. legislative optimism. As of May 2025, Ethereum hosts over $124.5 billion in stablecoins, solidifying its role as the backbone of the on-chain economy.

The stablecoin market cap has jumped by $33 billion in 2025, reaching over $250 billion, with strong demand across DeFi, trading, and payments. As the U.S. considers the GENIUS Act, Ethereum is poised to benefit, but Bailey’s message remains clear: proactive regulation is essential to prevent the rapid growth of stablecoins from undermining monetary sovereignty.

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