FSOC Reassesses Crypto Risk as Tokenization Gains Ground

The Financial Stability Oversight Council (FSOC) has recently made a significant change in its approach to digital assets, indicating a shift in regulatory focus as tokenization strategies flourish on platforms like Solana and with Wrapped XRP.

Key Takeaways

The FSOC has excluded digital assets from its systemic risk list.
Prior concerns highlighted in 2022 regarding crypto's impact on financial stability have been reassessed.
The council is now prioritizing long-term economic growth over identifying theoretical vulnerabilities.
Recent developments in tokenization, like JPMorgan’s initiatives and Wrapped XRP's expansion, reflect a growing acceptance of digital assets.
This change indicates that federal agencies are preparing to integrate digital assets and tokenized instruments into U.S. financial markets with a more targeted regulatory approach.

FSOC eases crypto risk stance as tokenization advances.

In its annual report released on December 11, 2025, the FSOC announced the removal of digital assets from its list of potential systemic risks to the U.S. financial system. This marks a notable departure from the council's previous stance in 2022, where they expressed concerns about the threats posed by crypto activities to financial stability.

FSOC Excludes Digital Assets from Risk Considerations

The FSOC's recent report does not contain specific warnings regarding digital assets as systemic risks. Instead, it points to improved regulatory frameworks and a retraction of previous warnings concerning banks that interact with the crypto market. Nevertheless, U.S. dollar stablecoins will still be monitored closely due to concerns regarding their potential use in illegal activities.

This policy change comes at a time when crypto legislation is progressing in Congress. Significant developments within the industry highlight this trend, including JPMorgan's tokenized commercial paper launched on the Solana network, the expansion of Wrapped XRP across various blockchain platforms such as Solana, Ethereum, Optimism, and HyperEVM, along with other tokenization initiatives by banks and asset managers.

The decision to remove crypto from the systemic risk list suggests that federal regulators are ready for digital assets, tokenized products, and blockchain-based settlement systems to assume a more significant role in the U.S. financial landscape. Regulatory experts believe this shift points towards a more nuanced oversight model, assessing digital assets alongside other emerging technologies.