New FSB and IOSCO assessments show rapid global movement but fragmented enforcement, rising arbitrage risks, and highlight India’s lack of a regulatory framework despite its massive crypto user base.
22 November 2025
Global crypto regulation has entered a critical phase, with new analyses from leading international bodies revealing both progress and troubling inconsistencies. The Financial Stability Board (FSB) and the International Organization of Securities Commissions (IOSCO) have released detailed reviews showing that while nations are moving faster toward crypto oversight, regulatory implementation remains scattered and incomplete. Against this backdrop, India stands out as one of the few major jurisdictions still without a formal crypto framework.
The FSB’s October peer review underscores the widening regulatory divide. Out of 29 jurisdictions assessed, only 11 have fully operational crypto-asset rules. Stablecoin governance is even thinner—barely five jurisdictions have adopted comprehensive frameworks, despite the stablecoin market nearing $290 billion and growing at a steep 75% annual rate. India appears in the FSB’s list of six jurisdictions with no framework, alongside China, Kazakhstan, Lebanon, Mexico, and Saudi Arabia. IOSCO’s thematic review, notably, did not include India at all, despite the country hosting over 100 million retail crypto users —the largest such user base in the world.
Even among jurisdictions with established rules, enforcement varies substantially. Countries such as Australia, Singapore, Hong Kong, Bermuda, and Canada have transitioned from drafting regulations to policing them—taking action against platforms like Binance, CoinEx, XT.com, and unlicensed crypto ATM networks. India, in contrast, primarily relies on anti-money laundering oversight under the Prevention of Money Laundering Act (PMLA), without comprehensive measures covering custody, licensing, consumer protections, or market surveillance.
This regulatory vacuum intensifies arbitrage pressures. With stricter rules emerging in other markets, crypto firms often migrate to more lenient jurisdictions. India has become an example of this trend, as offshore platforms continue to service Indian users from abroad, reducing regulatory visibility and heightening systemic risks.
The FSB and IOSCO both highlight a major shared vulnerability: the structurally cross-border nature of stablecoin operations. When reserve management, liquidity standards, and redemption procedures differ across jurisdictions, stress events can prompt investors to flee toward the weakest regulatory point. This dynamic threatens reserve stability and can trigger broader market contagion. IOSCO further notes that stablecoin issuers increasingly place reserves in short-term Treasuries and money-market instruments, intensifying interdependence between crypto markets and traditional finance.
Cross-jurisdictional cooperation also remains far below expectations. Although the IOSCO Multilateral Memorandum of Understanding (MMoU) includes signatures from all relevant jurisdictions, actual information-sharing activity is minimal—typically limited to just one or two annual requests. The FSB similarly flags the absence of standardized global data on leverage, liquidity risks, and crypto-traditional finance linkages, limiting the ability of regulators to coordinate effectively.
The FSB’s staging system captures these disparities. Countries such as the Bahamas, Bermuda, the European Union, Hong Kong, Japan, Nigeria, Singapore, Thailand, and Türkiye have reached Stage 5, meaning their frameworks are fully operational. India lags at Stage 1, with no legislative draft, regulatory proposal, or timeline announced.
Ultimately, both reports converge on one central message: regulatory certainty is critical to financial stability and sustainable market growth. Clear frameworks bring activity under supervision; ambiguous or absent rules push it offshore, where risks accumulate beyond a regulator’s reach. Regulatory arbitrage, fragmented stablecoin oversight, and inadequate custody norms now pose real threats not only to investor protection but also to macro-financial stability.
For India, the imperative is unmistakable. Even a phased regulatory approach would provide clarity, foster safer innovation, and enable better oversight of emerging risks. An internationally coordinated framework would position India as a reliable digital-asset market and reinforce the broader financial stability objectives of both the government and the Reserve Bank of India.
