US Financial Watchdog No Longer Sees Crypto as Systemic Threat: Report

Core Insights - The Financial Stability Oversight Council (FSOC) has removed cryptocurrency from its list of systemic financial threats in its 2025 annual report, marking a significant regulatory shift under the Trump administration [1] - The 2025 report emphasizes responsible growth and regulatory clarity for the crypto sector, contrasting sharply with the previous year's warnings about stablecoins being a vulnerability [2] Legislative Progress and Regulatory Changes - The FSOC's 2025 report acknowledges the role of digital assets in innovation and economic development, highlighting recent legislative progress that has addressed prior concerns [2][3] - The passage of the GENIUS Act in July established a comprehensive federal framework for payment stablecoins, requiring licensed issuers to maintain reserves in highly liquid assets and limiting rehypothecation [3][4] - Treasury Secretary Scott Bessent noted that the continued use of dollar-denominated stablecoins supports the dollar's role in international finance [4] Banking Access and Regulatory Environment - Federal agencies have withdrawn restrictive guidance that previously discouraged banks from engaging with crypto firms, with the SEC eliminating prior-notification requirements for offering digital asset custody services [5] - Banking regulators rescinded joint statements that pushed crypto activity outside traditional finance, and the Federal Reserve returned oversight to normal supervisory processes [5] - Preliminary findings from the Office of the Comptroller of the Currency revealed that the largest national banks imposed inappropriate restrictions on lawful crypto businesses from 2020 to 2023 [6] - Comptroller Jonathan Gould criticized these practices as harmful to lawful enterprises and an inappropriate use of national bank charters [7]