Digital assets have vanished from government “vulnerability” list, officially ending a three-year regulatory chokehold on US banks

The Financial Stability Oversight Council's (FSOC) 2025 annual report officially removed digital assets from its list of financial-system vulnerabilities, concluding a three-year period where crypto was viewed as a systemic contagion risk. The term "vulnerability" was dropped entirely, reclassifying digital assets as a "significant market development to monitor," reflecting increased institutional participation via spot Bitcoin and Ethereum ETFs and asset tokenization.

This shift is supported by coordinated policy changes: President Trump's Executive Order 14178 revoked the previous administration's crypto EO, favoring responsible growth; Congress passed the GENIUS Act, establishing a regulatory framework for stablecoins overseen by banking regulators; and agencies like the SEC rescinded SAB 121, while the OCC eased restrictions on banks engaging in crypto custody and principal transactions. Treasury Secretary Scott Bessent reframed FSOC's mission to prioritize long-term economic growth alongside stability.

This de-escalation removes the macroprudential stigma that deterred large financial institutions from crypto exposure. While global watchdogs like the FSB and FATF maintain concerns regarding illicit finance and fragmented international standards, the US action signals confidence that existing prudential and AML oversight can manage current exposures, clearing a cleaner legal path for banks to integrate into the crypto infrastructure layer supporting Bitcoin's growing macro-asset role.

(Source：CryptoSlate)