FSOC Removes Crypto From Systemic Risk List as Tokenization Gains Momentum

Source: Cryptonews Original Title: FSOC drops crypto from systemic risk list as tokenization gains momentum Original Link:

Overview

The Financial Stability Oversight Council (FSOC) has removed digital assets from its list of potential systemic risks, according to the council’s annual report released on December 11, 2025. This decision represents a significant reversal from the council’s 2022 report, which stated that crypto-asset activities “could pose risks to the stability of the U.S. financial system.” The earlier report cited concerns about leverage, interconnections between traditional finance and crypto markets, and the lack of unified oversight.

Policy Shift and Regulatory Focus

Treasury Secretary Scott Bessent stated in the report’s opening letter that the council’s mandate now focuses on long-term economic growth rather than identifying every theoretical “vulnerability.” The 2025 annual report has been shortened compared to previous years, with regulatory priorities narrowed, according to the document.

The latest report does not include explicit systemic risk warnings related to digital assets. Instead, the document notes clearer regulatory structures and the withdrawal of previous warnings about banks engaging with the crypto sector. Regulators stated that U.S. dollar stablecoins still require monitoring, particularly regarding potential misuse in illicit finance.

Institutional Tokenization Development

The policy shift occurs as crypto-related legislation advances in Congress. Recent institutional developments include tokenized commercial paper issuance on Solana, Wrapped XRP’s expansion across multiple blockchain platforms including Solana, Ethereum, Optimism, and HyperEVM, and tokenization initiatives from banks and asset managers.

Market Implications

The removal of crypto from the systemic risk list indicates federal agencies are preparing for digital assets, tokenized instruments, and blockchain-based settlement systems to play a role in U.S. financial markets. The change suggests oversight may become more targeted as digital assets are evaluated alongside other emerging technologies, signaling a maturation in regulatory approach toward the crypto sector.