Key Insights
• FSOC crypto risk removed from the U.S. systemic threat list for the first time.
• Regulators shift from broad warnings to a more targeted oversight approach.
• Treasury signals focus on long term growth instead of hypothetical vulnerabilities.
• Institutional tokenization efforts influenced FSOC’s softened stance.
• Move positions 2026 as a potential turning point for U.S. digital asset policy.
FSOC crypto risk designation has been officially taken off the U.S. systemic threat list. This is one of the biggest changes in the country’s digital asset policy. The Financial Stability Oversight Council’s annual report, which came out on December 11, 2025, went into great detail about the change. It is a big change from the cautious tone that has guided federal oversight in recent years.
Scott Bessent, the Secretary of the Treasury, said that the council’s new job is to focus on long-term economic growth, not finding every possible weakness. The 2025 report is much shorter than earlier reports and doesn’t use as much bureaucratic language. It limits FSOC’s regulatory priorities and shows that they are moving toward a more practical, risk-based approach.
The 2022 FSOC report from two years ago said that activities involving crypto assets “could pose risks to the stability of the U.S. financial system.” The main worries were about leverage, markets that are linked to each other, and the lack of a single set of rules for all markets. Today’s change shows how much the official position has changed as digital assets become more common in the financial system.
FSOC crypto risk language softens as regulators step back from broad warnings
The new report doesn’t include any clear warnings about systemic risks related to digital assets. Instead, it talks about how industry oversight has gotten better and how regulatory responsibilities are now clearer. Earlier warnings that told banks not to work with crypto businesses have been taken back.
Regulators still say that U.S. dollar stablecoins need to be watched closely, especially when it comes to illegal money. But the tone has definitely changed. FSOC used to see crypto as a possible cause of financial instability, but now it sees the market as changing and becoming more in line with regulations.
The real-world effect is big. Taking out the FSOC crypto risk language takes some of the political pressure off of agencies to enforce the law more strictly, which could lead to more institutions getting involved. It also shows that regulators don’t think digital asset markets are as structurally dangerous as they used to think.
FSOC aligns with legislative momentum and institutional adoption
The removal of FSOC crypto risk comes at a time when Congress is once again pushing for crypto market structure bills. Proposals for custody, trading, and stablecoin frameworks that have support from the industry are becoming more popular. Lawmakers are also working together to make it easier for the CFTC, SEC, and banking regulators to keep an eye on things.
The change also comes after a number of important adoption milestones:
• JPMorgan issued tokenized commercial paper on Solana.
• Wrapped XRP spread to Solana, Ethereum, Optimism, and HyperEVM.
• Banks and asset managers started new tokenization tests
These changes show that blockchain-based settlement, tokenized instruments, and digital assets are no longer just experimental. They are becoming a part of the traditional financial system. FSOC probably came to the conclusion that digital assets don’t pose systemic threats right now because of this trend.
The council took crypto off its list of risky things, but regulators are still worried about stablecoin abuse and money moving across borders. The new report, on the other hand, says that oversight will now focus on specific areas instead of giving general warnings.
FSOC crypto risk removal signals a new era for U.S. digital asset policy
The council is showing that it trusts the market’s growth by taking FSOC crypto risk off its list of systemic threats. It seems that federal agencies are getting ready for a time when digital assets and tokenized markets will work with traditional finance under clearer rules.
The change makes 2026 a possible turning point. Oversight might now be more accurate, innovation might have fewer structural barriers, and banks might be more willing to use blockchain tools. It looks like regulators are changing the way they look at risk. Instead of seeing digital assets as inherently dangerous, they are starting to see them as any other new technology.
The change is a big boost for the morale of the crypto industry. It sets the stage for the next chapter of U.S. financial modernization for policymakers. The most important question now is how quickly Congress passes this new set of rules into law and whether agencies create frameworks that encourage innovation without putting stability at risk.
