Treasury Sec. Scott Bessent wants a new playbook that could rewrite crypto rules

Treasury Secretary Scott Bessent, who chairs the Financial Stability Oversight Council (FSOC), is preparing a new policy letter that shifts the body away from simply tightening rules and toward actively removing regulations that are judged to be “undue burdens” on growth. 

FSOC was created after the 2008 financial crisis to monitor threats that could crash the entire system - from too-big-to-fail banks to shadow lenders - and to coordinate regulators like the Fed, SEC and CFTC. 

Now, under a crypto-friendly Trump administration and a Treasury that has backed new stablecoin rules and tokenization pilots, Bessent’s pivot could reshape how federal agencies treat digital assets. 

Related: Major labor union warns new bill could put retirement savings at risk

FSOC moves from 'tightening' to 'loosening' systemic-risk rules

According to a letter obtained by CNBC, Bessent will tell fellow regulators that FSOC should start asking whether existing rules are actually hurting stability by choking growth and innovation. 

The draft says the Council will work with member agencies to consider whether parts of the U.S. regulatory framework “impose undue burdens and negatively impact economic growth, thereby undermining financial stability.”

That’s a sharp turn from FSOC’s original mandate under Dodd-Frank, which emphasized stricter oversight, extra capital and heavier supervision for firms seen as systemically important after the 2008 crash. 

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Bessent’s plan fits neatly into the broader Trump-era deregulatory push. At the same time that Congress advances industry-backed crypto bills like the GENIUS stablecoin law and the CLARITY market-structure act, FSOC is being steered away from expanding its footprint and toward pruning it back. 

The new framework will be unveiled alongside an FSOC meeting where Bessent is expected to formally update the council on its priorities, CNBC reported. This marks the clearest signal yet that systemic-risk policy is being reframed around economic expansion rather than precautionary restriction.

Crypto industry stands to benefit as FSOC softens its stance

FSOC has been one of the key venues where federal officials framed crypto as a potential systemic threat.

In 2022, the council’s Report on Digital Asset Financial Stability Risks and Regulation warned that “crypto-asset activities could pose risks to the stability of the U.S. financial system” and stressed the need for “appropriate regulation, including enforcement of existing laws.”

That report pushed agencies to:

• Treat some stablecoins like money-market funds or payment infrastructure
• Tighten oversight of exchanges, custodians and lending platforms
• Improve data-sharing on interconnected risks across banks and crypto markets

If FSOC’s new baseline is to dial down burdens that might “negatively impact economic growth,” crypto trade groups will likely argue that overly broad systemic-risk language around stablecoins, DeFi, and tokenization belongs on the chopping block. 

Related: Explained: What is a stablecoin?

For an industry that’s spent years framed as a potential source of the “next financial crisis,” even a change in tone from the systemic-risk council is meaningful. 

However, analysts warn that deregulation is not without risks. 

Illia Otychenko, Lead Analyst at CEX.IO, told TheStreet Roundtable that lighter systemic-risk rules “could make it easier for companies and financial institutions to roll out products like stablecoins and tokenized assets,” adding that reduced friction may encourage both crypto firms and traditional banks to experiment more aggressively with blockchain-based products.

But he cautioned that FSOC had previously highlighted dangers tied to stablecoin reserves and regulatory gaps. 

“Fewer rules can also increase the chance of blow-ups or instability,” he said, noting that faster innovation “must be balanced with clear, basic safeguards so growth doesn’t outpace risk management.”

AI, tokenization and spot crypto show a broader integration trend

Bessent’s letter won’t just talk about deregulation. He is also forming a new FSOC working group to:

“Explore opportunities for [artificial intelligence] to promote the resilience of the financial system while also monitoring for potential risks to financial stability that might be posed by the adoption of AI.”

That AI focus builds on FSOC’s 2024 conference on Artificial Intelligence & Financial Stability, held with the Brookings Institution, which examined how machine learning could both amplify and mitigate systemic risks. 

Related: Treasury Secretary Bessent reveals plan to tackle soaring $38T debt

For crypto, that intersects with real-world experiments in AI-driven risk engines, on-chain surveillance and automated margining for tokenized assets. 

The CFTC has already approved the trading of spot crypto asset contracts on CFTC-registered futures exchanges for the first time, with Acting Chair Caroline Pham arguing that 

“Recent events on offshore exchanges have shown us how essential it is for Americans to have more choice and access to safe, regulated U.S. markets.”

Taken together, Bessent’s FSOC pivot, the AI working group and parallel moves at the CFTC and Treasury all point in the same direction: away from treating crypto purely as a threat, and toward folding it into the core of U.S. market infrastructure under more flexible rules.