The world’s leading financial watchdog has warned that “significant gaps” persist in global efforts to regulate the fast-expanding cryptocurrency sector, cautioning that the lack of coordinated oversight could eventually threaten financial stability.

In a report released Thursday, the Financial Stability Board (FSB) — the G20-backed body established after the 2008 global financial crisis — said that countries have made only limited progress in implementing consistent crypto regulations since it issued comprehensive policy recommendations in 2023. The goal of those measures was to align crypto oversight with the standards applied to the traditional financial system.

However, the FSB said that despite recent steps forward in several major economies, the global regulatory landscape for digital assets remains “fragmented, inconsistent, and insufficient to address the global nature of crypto-asset markets.”

“Without stronger international coordination, regulatory arbitrage will persist and vulnerabilities will continue to build,” the board warned, adding that countries must accelerate efforts to apply robust prudential and consumer-protection frameworks across borders.

While the FSB noted that current financial stability risks remain limited, it cautioned that those risks are “rising rapidly” amid renewed investor enthusiasm. Over the past year, the value of the global cryptocurrency market has doubled to around $4 trillion, driven by a surge in bitcoin and other digital tokens.