FSOC's 2025 Annual Report Softens Crypto Stance, Highlights GENIUS Act and Regulatory Shifts
The Financial Stability Oversight Council (FSOC) has adopted a more measured tone toward crypto assets and stablecoins in its 2025 annual report, reflecting a softer regulatory stance compared to previous years. This shift comes amid calmer markets, political realignment, and a greater willingness among regulators to integrate crypto within the broader financial system.
Enacted in July 2025, the GENIUS Act provides a federal framework for payment stablecoin issuers, offering regulatory clarity intended to incentivize innovation while reducing systemic risks. Yan Ketelers, CMO at human.tech, noted that the Act imposes reserve rules and disclosure requirements enabling regulators to treat crypto risks as manageable rather than existential threats.
Federal banking agencies have clarified that banks may engage in certain crypto activities if those align with safety, soundness, and legal standards. They withdrew 2023 joint statements, issued new permissible-activity guidance, and removed the previous 'no objection' notification requirements for some digital asset activities.
Notably, the 2025 FSOC report omits prior warnings from 2024 concerning stablecoin runs and market concentration. The 2024 report had highlighted that one firm accounted for approximately 70% of the stablecoin market value and cautioned that investor losses could undermine regulatory efforts.
While the FSOC downplayed concerns about illicit activity, stating that most on-chain activity is legitimate and that enforcement should focus on criminal misuse without impeding lawful operations, it cautioned that risks are redistributed rather than eliminated, shifting to areas like interfaces, custody, identity, and control points.
This adjusted position contrasts with approaches in Europe, where the UK plans to implement crypto regulation starting in 2027. The UK's Financial Conduct Authority has urged Prime Minister Keir Starmer to prioritize stablecoin regulation.
