Federal Reserve Chairman Kevin Warsh told the House Financial Services Committee on July 14 that the central bank would refuse to bail out the cryptocurrency industry in a crisis, a message he delivered during his first biannual testimony on monetary policy as president.
The exchange came from Rep. Brad Sherman (D-Calif.), a longtime crypto skeptic, who questioned whether the Fed would back failed digital asset companies the way it backed money market funds in 2008. Warsh rejected that premise. “We don’t want to be in the rescue business, for sure,” he added. He said. “We want to be in a position where we are not bailing out anyone, including cryptocurrencies,” he added.
wars, Who took over He took office on May 15 and chaired the first FOMC meeting in June, and has shaped the position throughout his own history.
As Fed governor under Chairman Ben Bernanke, he helped design the 2008 rescue effort. “I still have the scars of the 2008 financial crisis,” he said. “This is not something we want to repeat.” He said post-crisis bailouts generated moral hazard, and he wants to spare digital assets from the same fate.
For a market that has spent years searching for legitimacy alongside traditional finance, the comments draw a hard line. workshops, described As the first cryptocurrency Fed chair, he treated Bitcoin as a standard rather than a state custodian. During his nomination hearing, he described bitcoin as “no substitute for the US dollar,” and used its price as a thermometer to determine whether monetary policy is in the right place.
Warsh chimes in on the GENIUS Act rules deadline
The warning arrives days before the pivotal deadline. The rules for implementing the GENIUS Act, the stablecoin law passed in 2025, are Scheduled SaturdayWarsh stressed that the Fed is “rushing” to publish its proposals on time.
The law pays stablecoin holders before other creditors when the issuer fails and requires full reserves behind each coin. With the stablecoin market approaching $310 billion, Sherman stressed that the scramble for a single source could spread across the sector.
Warsh refused to make an absolute commitment. He told lawmakers that the Fed would move to limit “extraordinary” risks over the next four years, language that leaves room to intervene in a systemic event. American Banker indicated that it refused to rule out any future intervention.
In the Senate Banking Committee the next day, Warsh urge Banking regulators must coordinate on GENIUS Act rulemaking to prevent regulatory arbitrage, a race that allows companies to seek the lightest oversight.
He accompanied this call with a defense of the Fed’s independence in monetary policy and a pledge to shrink the balance sheet approaching $6.7 trillion.
The lesson for cryptocurrencies is the age of market discipline: the Fed will set the rules of the road, yet companies that overstep their bounds will bear the cost of their failures. For an industry that has been asking for federal support, Warsh’s letter asks it to stand alone.
