Warsh says Fed should avoid bailouts, including for crypto
Fed Chair Kevin Warsh told Congress the central bank should avoid crypto rescues, keep policy focused on inflation and monetary independence, and coordinate GENIUS Act rules with other U.S. bank regulators.
Federal Reserve Chair Kevin Warsh said in congressional testimony that the Fed should not bail out the cryptocurrency market or stablecoin projects, should keep its balance sheet as small as possible outside genuine crises, and should preserve its independence by keeping that independence closely tied to monetary policy. He said the Fed is working with other U.S. bank regulators on implementing the GENIUS Act and is "racing" to meet the legislation’s Saturday rulemaking deadline to limit regulatory arbitrage. Warsh, who took office on May 15 and left rates unchanged at 3.50% to 3.75% at his first policy meeting in June, also drew public support from Sen. Mike Rounds, who said Warsh struck the right tone on inflation and central bank independence and was correct to hold rates steady.
- regulatory arbitrage: When firms seek the least restrictive regulator or legal framework to reduce compliance burdens.
- stablecoin: A type of digital token designed to maintain a stable value, often by being linked to another asset.
- Federal Reserve independence: The central bank’s ability to set monetary policy without political pressure.