FSB pressures Turkey regulators to lock down foreign stablecoins

The Financial Stability Board (FSB) urged Turkey to strengthen safeguards for foreign-issued stablecoins traded on local crypto exchanges, emphasizing the need for robust reserve verification and transparent redemption mechanisms in a peer review released on November 11.

The review highlights domestic exchanges as a means to monitor tokens issued abroad, recommending targeted expectations for maintaining token pegs, disclosing backing assets, and mandating issuer transparency.

The assessment does not introduce new regulatory restrictions, redemption rights, or legal obligations.

The assessment draws on reforms implemented through August 2026, noting Turkey’s progress in crypto-platform registration and licensing, as well as developments in custody separation and centralized monitoring.

However, the assessment identifies a lack of a dedicated stablecoin issuance regime or specific listing requirements addressing stabilization mechanisms, reserve transparency, or peg tracking.

Existing regulations cover distribution, trading, and custody operations, alongside anti-money-laundering controls, transfer limitations, and a ban on domestic crypto payments. These controls, however, do not comprehensively address stablecoin-specific reserve and redemption arrangements.

report recommends that issuer rules incorporate effective mechanisms for maintaining stable value, impose prudential requirements, and guarantee clear redemption rights. Specifically, for foreign-currency tokens circulating through Turkish platforms, the FSB advocates for targeted reserve composition and transparency mandates, including third-party attestations and audit requirements.

These are nonbinding recommendations. The assessment creates no new legal obligations or redemption rights.

The review highlighted that assessing reserve transparency, redemption practices, and incident management is challenging when foreign issuers or supervisors fail to provide sufficient information.

A gap for people holding stablecoins

The practical challenge for token holders is connecting a local token purchase to its backing and redemption arrangements abroad.

Enhanced oversight of a Turkish distributor could improve scrutiny of these arrangements, but the FSB’s recommendations do not provide customers with a new mechanism for liquidity withdrawal.

According to the assessment, stablecoins function as a store of value, a hedge against lira depreciation, and a means to transfer liquidity between domestic and offshore platforms.

Additionally, the FSB seeks clarity on how payments and e-money legislation would apply to fully backed fiat-pegged stablecoins. The assessment noted that policy directions and timelines remain undefined, emphasizing the need for safeguards that keep foreign-currency stablecoins distinct from domestic payment systems.

Turkish authorities described domestic stablecoin exposures as modest within the review. The FSB cautioned that broader adoption could trigger currency substitution, increase capital flow volatility, and strain bank funding.

The recommendations call for a coordinated regulatory framework that links issuer safeguards, local distribution mechanisms, and cross-border supervision.

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