FSOC’s 2025 Report Eases Focus on Crypto Risks as U.S. Regulators Shift Tone

The U.S. Financial Stability Oversight Council (FSOC) has noticeably softened its stance on the crypto sector in its 2025 annual report, stepping away from years of highlighting digital assets as a potential vulnerability to the U.S. financial system. This shift isn’t exclusive to crypto—the report as a whole removes much of its traditional emphasis on “vulnerabilities,” signaling a broader change in regulatory perspective.

Created after the 2008 financial crisis, the FSOC was designed to serve as an early-warning system, identifying emerging threats across financial markets. Crypto had appeared annually, with past reports noting the sector’s relatively small size but cautioning that stablecoins and exchange-traded funds could pose systemic risks if deeply integrated into traditional finance. In this year’s edition, released by regulators under President Donald Trump, those explicit concerns are absent.

Treasury Secretary Scott Bessent emphasized in the opening letter that focusing solely on risks is no longer enough. He argued that long-term economic growth and financial security must also play a central role in safeguarding stability—an approach reflected in the streamlined 87-page report, a sharp reduction from the 140-page 2024 version.

Unlike last year’s report—which pushed Congress to regulate stablecoins and assign clearer oversight of spot crypto markets—the 2025 edition does not issue direct recommendations on digital assets. Instead, it references guidance from this year’s President’s Working Group report, which promotes innovation and aims to reinforce U.S. leadership in digital financial technology.

The FSOC also acknowledges a policy shift by U.S. regulators who have relaxed previous restrictions that discouraged financial institutions from engaging with crypto. While the report praises the sector’s growing strengths, it still flags the potential illicit use of stablecoins. Yet it also predicts that U.S. dollar-backed stablecoins will continue supporting the dollar’s dominance in global finance over the next decade.

This evolving tone highlights a regulatory environment more willing to embrace digital assets while maintaining caution where necessary.