The Financial Stability Oversight Council (FSOC) has made a striking policy pivot in its newly released 2025 Annual Report, officially removing crypto from its list of systemic financial threats and shifting its focus from warnings to integration and regulatory clarity. A new posture for crypto In an 86‑page report, the FSOC abandons the alarmist tone of 2024 — when the council warned that stablecoins were “vulnerable to runs” and posed risks to market confidence — and instead emphasizes the role digital assets can play in “secure, efficient transactions through distributed ledger technology.” The council explicitly credits legislative moves this year, most notably the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act, enacted in July 2025, for providing the regulatory framework it had previously said was missing. What changed for banks and regulators The report signals concrete operational changes as well as rhetoric. FSOC documents and joint statements that focused solely on crypto risks have been withdrawn and replaced with new guidance on permissible engagements between banks and digital asset ecosystems. Crucially, the council has removed the “no objection” hurdle that had required prior supervisor approval for certain bank crypto activities — effectively clearing banks to move beyond guarded experimentation into more routine participation. Regulatory rulemaking on the way FSOC urges its member agencies to issue comprehensive guidelines covering digital asset custody, tokenization standards, permissionless blockchains, and clear anti‑money laundering/combating the financing of terrorism (AML/CFT) expectations. The intent is to replace piecemeal enforcement with a structured integration strategy designed to unlock the economic potential of a now “de‑risked” sector. Market signals and supervisory actions The report points to market developments as evidence of maturation: the strong performance of spot Bitcoin and Ethereum ETFs and accelerated tokenization activity in 2025. It also notes supervisory moves that reinforce the shift — including OCC approvals for certain crypto activities and preliminary trust charter applications for Circle, Ripple, and Fidelity Digital Assets. Risks remain, but enforcement will be targeted FSOC does not declare crypto risk‑free. The council acknowledges ongoing illicit finance concerns related to some stablecoins, but stresses that most on‑chain activity is transparent and legitimate, supporting continued targeted enforcement rather than broad restrictions on lawful uses. Global fragmentation and the arbitrage risk While the U.S. appears to have settled its domestic debate, the FSOC warns that global fragmentation persists. A contemporaneous thematic review from the Financial Stability Board (FSB) cautions that inconsistent regulation among major economies could threaten global financial stability. Although the U.S. (via the GENIUS Act), the EU (MiCA), and Singapore are moving ahead with frameworks, the FSB notes only a handful of jurisdictions have fully implemented its 2023 recommendations on crypto‑asset and stablecoin oversight. That patchwork — with the UK roughly aligned to the U.S. model and some European authorities still cautious — raises the prospect of regulatory arbitrage as we move into 2026. Bottom line FSOC’s 2025 report marks a clear turning point: the agency has moved from flagging crypto as a systemic threat to actively shaping how the industry is integrated into regulated finance. The U.S. is positioning itself as a model for balancing innovation and stability, but the industry’s long‑term resilience will depend on synchronizing global guardrails to close the “significant gaps” the FSB identified. Disclaimer: This content is informational and not investment advice. Trading or investing in cryptocurrencies carries high risk; readers should do their own research before making decisions. © 2025 AMBCrypto Read more AI-generated news on: undefined/news

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