The Fed chair told lawmakers the central bank does not want to rescue digital-asset firms, while leaving room to address extraordinary systemic risks as stablecoin rules near a Saturday deadline.
Federal Reserve Chair Kevin Warsh said the central bank will not rescue the cryptocurrency industry in a crisis, drawing a sharp line for digital-asset firms just days before rules to implement the GENIUS Act stablecoin law are due Saturday. In testimony to the House Financial Services Committee on July 14, Warsh rejected the idea of backstopping failing crypto companies and said the Fed does not want to be in the bailout business, including for crypto. Warsh tied that stance to his experience during the 2008 financial crisis, when he served as a Fed governor under Chairman Ben Bernanke and helped design rescue measures. He said those interventions created moral hazard, reinforcing his view that digital assets should not expect the same treatment. The comments matter for a sector that has spent years seeking legitimacy alongside traditional finance, especially as Warsh has portrayed Bitcoin as a market signal rather than something the state should protect. The exchange came after Rep. Brad Sherman raised the risk that stress at one stablecoin issuer could spread across the sector. The GENIUS Act requires full reserves behind each coin and gives stablecoin holders priority over other creditors if an issuer fails. Warsh said the Fed is racing to release rule proposals on time, but he stopped short of an absolute no-intervention pledge, saying the central bank would act to limit extraordinary risks over the next four years. That leaves open the possibility of action in a systemic event, while signaling a broader market-discipline approach in which regulators set the framework and firms bear the cost of failure.