The U.S. government effectively capitulated on its coordinated banking blockade of the cryptocurrency sector this week. In its 2025 Annual Report, the Financial Stability Oversight Council (FSOC) removed digital assets from its list of financial system “vulnerabilities,” a structural pivot that signals the formal end of the era industry insiders dubbed “Operation Choke Point 2.0.”
From Contagion to Growth
Treasury Secretary Scott Bessent, chairing the council, delivered a report that is fundamentally unrecognizable from the 2022-2024 editions. Previous reports framed crypto solely as a contagion vector requiring “interagency coordination, a euphemism” often interpreted by banks as a directive to offboard crypto clients. The 2025 iteration scraps this language entirely.
The council explicitly pivoted its mandate from identifying theoretical risks to fostering “long-term economic growth.” The phrase “vulnerability” was purged from the digital assets section table of contents. Instead, the report categorizes the sector under “significant market developments,” a neutral classification that treats the asset class as a legitimate component of the financial architecture.
The continued growth of USD-pegged stablecoins is expected to strengthen the dollar’s position in the global financial system over the next decade.
This admission marks a 180-degree turn from the Biden administration’s stance, which frequently cited stablecoin runs as a threat to monetary sovereignty. The Treasury now views dollar-backed assets like USDC and PYUSD as instruments of soft power rather than systemic threats.
Banking Rails Reopen
The policy shift is already trickling down to the plumbing of Wall Street. The Office of the Comptroller of the Currency (OCC) recently issued Interpretive Letter 1188, authorizing national banks to act as “riskless principals” in crypto transactions. This guidance allows banks to facilitate institutional trades without holding the assets on their balance sheets, effectively nullifying the capital requirement hurdles that previously froze them out of the market.
Markets reacted cautiously to the news. Bitcoin hovered around $89,700 (-0.4%), consolidating after a weekend dip to $87,600. Traders appear to have priced in the regulatory thaw, shifting focus to execution risk. The institutional machinery is already moving; JPMorgan has begun piloting tokenized commercial paper on Solana, a move that would have drawn regulatory fire just twelve months ago.
With the “reputational risk cudgel” removed from bank examiners’ hands, the barrier to entry for custodial giants in 2026 is no longer regulatory—it is purely competitive.
