Fed Chair Kevin Warsh Rejects Crypto Bailout

Federal Reserve Chair Kevin Warsh told the House Financial Services Committee on July 14 that the Fed will not rescue the cryptocurrency industry in a crisis, emphasizing that the central bank "does not want to be in the bailout business, full stop." Warsh, who helped design the 2008 rescue effort, said the experience left "scars" and that repeating such bailouts would create moral hazard. He declined to give an absolute pledge but noted the Fed will act to limit "extraordinary" risks if a systemic event arises.

The remarks came as lawmakers pressed the Fed on the upcoming deadline for rules under the 2025 GENIUS Act, which requires stablecoins to be fully backed and gives holders priority over other creditors. With the stablecoin market valued at about $310 billion, Warsh said the Fed is "racing" to publish its proposals. He also reiterated the Fed’s independence on monetary policy and its plan to shrink a $6.7 trillion balance sheet. The comments signal a shift toward market discipline for digital‑asset firms.