- Federal Reserve Chair Kevin Warsh told lawmakers the central bank will not bail out stablecoin or cryptocurrency firms in a crisis, citing his experience during the 2008 financial crisis.
- Warsh said the Fed does not want to be in the bailout business and will seek to limit extreme risks without rescuing any firm, including crypto.
- Warsh did not directly promise to meet the Saturday deadline for GENIUS Act stablecoin rules but said he aims to coordinate rulemaking with other bank regulators.
- Bitcoin’s price stood at $64,657, up over 4% in the last 24 hours, while retail sentiment on Stocktwits remained bearish.
Federal Reserve Chair Kevin Warsh told the House Financial Services Committee on Tuesday that the central bank will not rescue stablecoin or cryptocurrency enterprises during a crisis. Representative Brad Sherman had asked whether the Fed would set up liquidity facilities for crypto if investors rushed to pull funds, as it had for money market funds in past crises.
“I still have the scars from the 2008 financial crisis,” Warsh said. “That is not something we want to repeat.” He added that the Fed does “not want to be in the bailout business. Full stop.”
When pressed again, Warsh said the Fed would do its best to mitigate extraordinary risks but would not bail out any firms. “We want to be in a position where we are not bailing out anybody, including crypto,” he stated.
Meanwhile, Representative Bryan Steil asked whether the Fed would meet Saturday’s statutory deadline to release rules under the GENIUS Act stablecoin law. Warsh did not make a direct promise but said he wants the Fed to coordinate with other bank regulators so that proposed rulemakings are issued at the same moment.
On the topic of speculative bubbles, Representative Al Green cited President Trump’s meme coin to argue that lower interest rates encourage speculative trade. Warsh replied that the Fed is not fully responsible for overseeing financial stability, noting that some subjects are more in Congress’s purview.
Representative Barry Loudermilk also asked about preventing “reputation risk” from being used to shut down energy and digital asset companies. Warsh confirmed that the Fed has removed reputational risk from its supervisory advice, adding that “being a good supervisor and regulator is tough business, and we don’t need to make it harder by bringing politics into it.”
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