US Financial Watchdog No Longer Sees Crypto as a Systemic Threat: What Changed?

For years, crypto was treated by US regulators as a ticking time bomb for the financial system. Volatility, leverage, opaque exchanges, and high-profile collapses made watchdogs nervous about spillover into traditional markets. But that tone is starting to shift. According to a recent report, a key US financial watchdog no longer views crypto as a systemic threat to the broader financial system a notable change in stance.

So what changed? First, crypto’s isolation from traditional finance has actually worked in regulators’ favor. Despite dramatic crashes, bankruptcies, and hacks, the damage largely stayed within the crypto ecosystem. Banks, pensions, and core financial plumbing were not destabilized. That containment mattered.

Second, regulation and risk controls have improved. Stablecoins are more closely monitored, exchanges face stricter compliance, and banks have clearer rules on how or whether they can interact with crypto. The result is less hidden leverage and fewer surprise linkages to the real economy.

Finally, crypto’s role has matured. Instead of being framed purely as a speculative casino, parts of the industry now resemble infrastructure payments, settlement, custody, and tokenization areas regulators can supervise more easily.

This doesn’t mean crypto is “safe” or unregulated. Risks remain for investors. But from a systemic perspective, US regulators now see crypto as volatile, but containable — a big psychological shift that could quietly open the door to clearer rules and wider institutional participation ahead.