Federal Reserve Chairman Kevin Warsh told the House Financial Services Committee on July 14 that the central bank will refuse to bail out the crisis-hit crypto industry, delivering this message in his first semi-annual monetary policy testimony as chairman.
The comment came from Rep. Brad Sherman (D-Calif.), a longtime cryptocurrency skeptic, who asked if the Fed intended to block failed digital asset companies in the same way it supported money market funds in 2008, a premise that Warsh rejected. “We don’t want to be in the rescue business, absolutely,” he said. He added: “We want to be in a position where we don’t bail out anyone, including cryptocurrencies.”
Mr. Warsh, who took office on May 15 and presided over the first FOMC meeting in June, has made his stance clear through his history.
As a Fed director under Chairman Ben Bernanke, he helped plan the 2008 relief effort. “The scars of the 2008 financial crisis are still there,” he says. “We don’t want that to happen again.” He argues that post-crisis bailouts created a moral hazard and wants to ensure digital assets don’t suffer the same fate.
The comments mark a hard line for a market that has spent years seeking legitimacy alongside traditional finance. Warsh, who is said to be the first crypto-native Fed chair, has treated Bitcoin as a measuring stick rather than a target for state oversight. During his nomination hearing, he said Bitcoin is “not a replacement for the US dollar” and has used the price of Bitcoin as a thermometer to gauge whether monetary policy is in the right place.
Warsh agrees $genius Legal regulation deadlines
Warnings are issued several days before important deadlines. Rules for implementing $genius The Stablecoin Act of 2025 is scheduled to be introduced on Saturday, and Warsh acknowledged that the Fed is “scrambling” to publish the proposal on time.
This law pays stablecoin holders ahead of other creditors if the issuer goes bankrupt and requires the full amount of reserves behind each coin. The stablecoin market is worth nearly $310 billion, and Sherman emphasized that a run on one issuer could spread across the sector.
Warsh declined to provide absolute commitments. He told lawmakers the Fed would act to limit “extraordinary” risks over the next four years, language that leaves room for intervention in systemic events. American Banker noted that it did not rule out future intervention.
The next day, before the Senate Banking Committee, Mr. Warsh told banking regulators: $genius Work on rulemaking to prevent regulatory arbitrage, where companies compete for the least amount of oversight.
He paired this call with a defense of the Fed’s independence in monetary policy and a promise to shrink its nearly $6.7 trillion balance sheet.
The point of virtual currency is the era of market discipline. The Fed sets the rules, but companies that go too far end up paying the price for their mistakes. For an industry that has sought federal aid, Warsh’s message is to become self-reliant.
This article, Fed Chairman Warsh: No Rescue for Crypto Industry in Crisis, was originally published in Bitcoin Magazine and is written by Mika Zimmerman.
