From Nasdaq:

The FSOC, established after the 2008 financial crisis, can label companies as systemic risks, with crypto now under its scrutiny. The council recently regained power to designate such threats, worrying lawmakers about the impact on the digital assets industry. Concerns have been raised over potential regulations that may impact emerging crypto giants.

Stablecoins and other crypto assets are seen as potential threats to the U.S. financial system by the FSOC, especially without legislation. Despite this, parties argue that current risks don’t warrant this action. There’s speculation that the FSOC may be using the risk designations as leverage to influence Congress while lacking an effective track record.

The council’s history is marked by inaction, with a focus on annual reports. The risk imposed on banks based on digital asset business relationships has highlighted the lack of appropriate supervision, raising doubts about the capability of the council to properly manage emerging threats. The process to bring a crypto firm under Fed supervision is lengthy and has never been utilized, indicating that designating a crypto firm as risky is an unprecedented move.

Republican lawmakers are cautioning against potential FSOC actions on crypto firms, with the issue likely to warrant further attention and discussion from both sides.



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