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FSOC: Crypto is no longer a "systemic threat"

FSOC: Crypto is no longer a "systemic threat"

PLUS: SEC pivots, MetsMask adds BTC, Oil breaks support and BTC breaks $85K

Cryptopolitan News
December 16, 2025 • Estimated Reading Time: 9 minutes

For the first time in years, U.S. regulators stopped treating crypto like a systemic threat.

In its 2025 Financial Stability Oversight Council (FSOC) report, crypto assets were scratched off the list of potential threats to U.S. financial stability. It’s a subtle signal, but an important one.

Past reports have concentrated on the risk components. This one steers towards sustainable economic growth as the underpinning of stability.

Treasury Secretary Scott Bessent, who chairs the FSOC, framed the change plainly: monitoring vulnerabilities alone isn’t enough. Long term growth and financial security is now at the heart of the Council’s agenda.

🧠 Quick explainer: What is the FSOC?

The Financial Stability Oversight Council (FSOC) is the U.S. government’s top watchdog for systemic financial risk. Established after the 2008 financial crisis, it was designed to identify dangers that might destabilize the entire financial system before they spun out of control.

FSOC is led by the U.S. Treasury Secretary and includes the leaders of the Federal Reserve, SEC, CFTC, FDIC, OCC and other key regulators.

When FSOC tags something as a “financial vulnerability,” it signifies that regulators could step in with tighter rules, warnings or other measures.

Even the term “vulnerabilities” was eliminated from the table of contents for the report.

📜 The GENIUS Act changed the dynamic

FSOC credits the GENIUS Act as a turning point. The legislation was signed into law in late July and created the federal cryptocurrency framework for stablecoin payments, forcing companies to maintain full reserve backing and be overseen by regulatory agencies like Fed, OCCs and FDIC.

Rather than warning that stablecoins could destabilize, the report contends that dollar-based stablecoins could actually help to solidify the dollar’s position as a global currency, if regulated properly.

That’s quite a contrast from last year.

The 2024 FSOC report identified stablecoins and the spot crypto market as potential emerging risks and warned Congress that it needed to act. The 2025 report takes the existence of action for granted and concentrates on action, on supervision and growth.

🏛️ A broader regulatory reset

The report also shows broader shifts in policy under the Trump administration:

Biden Administration’s crypto risk directives reversed with executive order 14178
The SEC revoked SAB 121, loosening balance-sheet treatment of custodial digital assets
The OCC green-lit banking in crypto and handed out trust charters to companies like Circle, Paxos, BitGo, Ripple and Fidelity Digital Assets

FSOC also highlighted a robust institutional performance in spot Bitcoin and Ethereum ETFs, as well as the rapidly-increasing momentum of tokenization markets, to make the point that regulated crypto activity is capable of scaling without threatening systemic stability.

There are still illegal finance risks on the radar, but the tone has shifted. The report notes that most on-chain activity is transparent and lawful, and it recommends targeted enforcement as opposed to broad-based restrictions.

🌍 The global contrast

As the United States softens its position, Europe is skeptical.

European authorities have cautioned that stablecoins could potentially be a systemic threat if left unsupervised, with some calling for them to be backed by central bank money. The British government wants to fully underpin crypto with financial regulation by 2027, a plan that is largely in step with the American model but unfolds more slowly.

The divergence is clear:

You have the U.S., which is working to integrate crypto into the system.
Europe is still debating how much to allow in.

Cryptopolitan’s take

This isn’t a green light. It’s something more important.

Crypto has gone from a “watchlist risk” to “regulated financial infrastructure.”

When regulators stop warning and start structuring, the market has already crossed a threshold.

The larger signal is not what FSOC said. It’s what it didn’t have to say anymore.

POLL: Is crypto still a systemic risk to the financial system?

📊 Market Watch

1️⃣ SEC pivots from warning to guidance

SEC issued a new investor bulletin outlining crypto wallets and risks associated with custody, including self-custody vs custodians, hot vs cold wallets, rehypothecation, and key-loss risks.

The tone matters. In a shift from years of enforcement-first messaging, the agency is now trying to educate investors. This comes on top of the DTCC’s blessing for tokenized stocks and Treasuries, suggesting a regulatory shift from “avoid crypto” to “so that’s how it works.”

2️⃣ MetaMask adds native Bitcoin

MetaMask now has native Bitcoin: hold, send, swap and buy BTC directly from your wallet.

No wrapping. No third-party apps. The move turns MetaMask into a genuine multichain hub as it adds Bitcoin on top of Ethereum, Solana and others. In a day when BTC was underperforming during U.S. hours, MetaMask is betting that easy access drives on-chain activity.

3️⃣ Oil breaks $60 as risk fades

Brent broke below $60 and WTI slipped south of $55 on Thursday as oversupply and lackluster demand finally caved in oil markets. Production by OPEC+ and increasing U.S. output, combined with the erosion of geopolitical premiums, brought crude down.
he move hit Asia-Pacific equities as investors pulled back from the AI trade. Risk appetite is thinning, fast.

👀 Chart our Analyst is watching

WET doubled on day one after its relaunch, jumping over 110% as it entered price discovery on Jupiter. Volumes spiked to ~$234M, with trading concentrated on OKX and KuCoin.

Despite early sniping drama and partial whale exits, liquidity held and distribution looks broader than feared. The way ahead still looks choppy.

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