by Coinstrooper Crypto Articles
Quick Take
  • The Financial Stability Oversight Council has removed crypto from its list of systemic financial threats in its 2025 annual report.
  • This is a dramatic regulatory shift attributable to the transformation happening under the Trump administration.
  • The legislation requires licensed issuers to maintain reserves in highly liquid assets, such as U.S.
  • Treasuries, and prohibits rehypothecation except for limited purposes.

What Happened

The Financial Stability Oversight Council has removed crypto from its list of systemic financial threats in its 2025 annual report. This is a dramatic regulatory shift attributable to the transformation happening under the Trump administration.

The 86-page document, approved December 11, eliminates the dire warnings about digital assets that dominated previous years, instead emphasizing responsible growth and regulatory clarity for the sector.

This year’s report acknowledges crypto’s role in innovation and economic development, while noting that recent legislative progress has addressed many of the concerns that previously existed.

Market Context

Market Structure Legislation Races Senate Deadline

The House passed the Digital Asset Market Clarity Act in July, giving the CFTC primary oversight of digital commodities while preserving SEC authority over fundraising.

Why It Matters

The FSOC’s latest assessment contrasts sharply with its 2024 report, which warned that stablecoins represented an acute vulnerability to runs absent appropriate risk-management standards.

Last week, Senator Cynthia Lummis pushed for immediate Senate Banking Committee markup of the Responsible Financial Innovation Act before the holiday recess, warning negotiations cannot drift into February without risking election-year paralysis.

Senator Thom Tillis warned that missing the December window could freeze the bill for the rest of 2026.

However, Senator Mark Warner also suggested completing everything before the holiday recess would be difficult, noting the White House still hadn’t provided final language on quorum and ethics rules.

Details

The council now describes digital assets as facilitating secure, efficient transactions through distributed ledger technology rather than framing them as destabilizing forces.

Legislative Progress and Banking Access Reforms

The transformation stems largely from the passage of the GENIUS Act in July, which established America’s first comprehensive federal framework for payment stablecoins.

The legislation requires licensed issuers to maintain reserves in highly liquid assets, such as U.S. Treasuries, and prohibits rehypothecation except for limited purposes.

Treasury Secretary Scott Bessent noted in the report that continued use of dollar-denominated stablecoins supports the dollar’s role in international finance.

Beyond stablecoins, federal agencies have systematically withdrawn restrictive guidance that previously discouraged banks from engaging with crypto firms.

The SEC eliminated prior-notification requirements for offering digital asset custody services, while banking regulators rescinded joint statements that effectively pushed crypto activity outside traditional finance.

The Federal Reserve ended its novel activities supervision program, returning oversight to normal supervisory processes.

The Office of the Comptroller of the Currency released preliminary findings showing all nine largest national banks imposed inappropriate restrictions on lawful crypto businesses between 2020 and 2023.

JPMorgan Chase, Bank of America, Citibank, Wells Fargo, and others maintained internal policies requiring escalated approvals or blanket limitations on digital asset companies, alongside sectors such as firearms and adult entertainment.

Comptroller Jonathan Gould described the practices as “harmful to lawful enterprises” and an inappropriate use of national bank charters.

The findings build on President Trump’s August executive order guaranteeing fair banking access and state-level fair access laws in Florida, Idaho, and Tennessee, designed to prevent ideological account closures.

She told the Blockchain Association Policy Summit that bipartisan drafts have been rewritten repeatedly, exhausting staff members as lawmakers struggle to reconcile the House and Senate approaches to defining which tokens fall outside securities classification.

The Senate version uses the term “ancillary assets” and faces tension over decentralized finance regulation.

Traditional Finance Embraces Tokenized Products