Federal Reserve Chair Kevin Warsh told the House Financial Services Committee on July 14 that the central bank will decline to rescue the cryptocurrency industry in a crisis. The statement came during his first semiannual monetary policy testimony as chair, in response to Rep. Brad Sherman (D-CA) asking whether the Fed would backstop failing digital-asset firms. Warsh rejected the premise, stating "We do not want to be in the bailout business, full stop," and added the Fed wants to avoid bailing out "anybody, including crypto." Warsh framed the stance through his experience as a Fed governor under Chairman Ben Bernanke, where he helped design the 2008 rescue effort. The testimony arrives days before Saturday's deadline for rules implementing the GENIUS Act, the stablecoin law enacted in 2025, with the stablecoin market near $310 billion.
Warsh Cites 2008 Crisis Experience in Rejecting Crypto Bailouts
Warsh, who took office May 15 and presided over his first FOMC meeting in June, connected his position to his role in the 2008 financial crisis. "I still have the scars from the 2008 financial crisis," he said during the testimony. "That is not something we want to repeat." He argued that post-crisis bailouts bred moral hazard, and he wants to spare digital assets the same fate.
During his nomination hearing, Warsh called Bitcoin "not a substitute for the U.S. dollar" and has used its price as a thermometer for whether monetary policy sits in the right place. Bitcoin Magazine described Warsh as the first crypto-native Fed chair, though his testimony draws a hard line between treating Bitcoin as a gauge rather than a ward of the state.
Fed Races to Meet Saturday GENIUS Act Rules Deadline
Rules to implement the GENIUS Act are due Saturday, and Warsh confirmed the Fed is "racing" to publish its proposals on time. The statute pays stablecoin holders ahead of other creditors when an issuer fails and requires full reserves behind each coin. With the stablecoin market near $310 billion, Sherman pressed the point that a run on one issuer could spread across the sector.
Warsh declined to offer an absolute pledge regarding future intervention. He told lawmakers the Fed would act to limit "extraordinary" risks over the next four years, language that leaves room for intervention in a systemic event. American Banker noted that he declined to rule out any future step-in.
At the Senate Banking Committee the following day, Warsh urged banking regulators to coordinate on GENIUS Act rulemaking to prevent regulatory arbitrage, a race that lets firms hunt for the lightest oversight. He paired that call with a defense of Fed independence on monetary policy and a pledge to shrink a balance sheet that sits near $6.7 trillion.
FAQ
What did Fed Chair Warsh say about crypto bailouts on July 14?
Fed Chair Kevin Warsh told the House Financial Services Committee on July 14 that the central bank will decline to rescue the cryptocurrency industry in a crisis. He stated "We do not want to be in the bailout business, full stop" and added the Fed wants to avoid bailing out "anybody, including crypto." Warsh connected this stance to his experience helping design the 2008 rescue effort as a Fed governor under Chairman Ben Bernanke.
When are the GENIUS Act stablecoin rules due?
Rules to implement the GENIUS Act are due Saturday, and Warsh confirmed the Fed is "racing" to publish its proposals on time. The statute pays stablecoin holders ahead of other creditors when an issuer fails and requires full reserves behind each coin. At the Senate Banking Committee the following day, Warsh urged banking regulators to coordinate on GENIUS Act rulemaking to prevent regulatory arbitrage.
What is the current size of the stablecoin market?
The stablecoin market is near $310 billion. During the July 14 testimony, Rep. Brad Sherman pressed the point that a run on one issuer could spread across the sector. Warsh declined to offer an absolute pledge regarding future intervention, telling lawmakers the Fed would act to limit "extraordinary" risks over the next four years.
