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Fed chair Kevin Warsh rejects crypto bailout in a crisis
Warsh told lawmakers the Fed will not backstop failing digital-asset firms, while regulators rush to finalize GENIUS Act rules for stablecoins due Saturday.
Bitcoin Magazine reports Federal Reserve Chair Kevin Warsh said the central bank will not bail out failing cryptocurrency firms during a crisis, stressing that the industry should bear its own risks even as regulators finalize new rules.
Warsh made the comments during his first semiannual monetary policy testimony to the House Financial Services Committee on July 14, responding to questions from Rep. Brad Sherman about whether the Fed would step in like it did for money market funds during the 2008 financial crisis.
Warsh rejected the comparison, saying the Fed does not want to be in the bailout business and wants to avoid bailing out anyone, including crypto, citing his experience with the 2008 rescue effort and the moral hazard that followed.
The exchange also comes as stablecoin rules under the GENIUS Act, enacted in 2025, are set to be due Saturday. Bitcoin Magazine adds that the law requires stablecoin issuers to hold full reserves behind each coin and gives stablecoin holders priority in issuer failures, with the stablecoin market reportedly near $310 billion.
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