Federal Reserve Chair Kevin Warsh told the House Financial Services Committee on July 14 that the central bank will not provide rescue financing to failing cryptocurrency firms during a financial crisis.
“We do not want to be in the bailout business, full stop,” Warsh said during his testimony. “We want to be in a position where we’re not bailing out anybody, including crypto.”
Warsh, who took office as Fed Chair in May and presided over his first Federal Open Market Committee meeting in June, invoked the 2008 financial crisis to frame his position. “I still have the scars from the 2008 financial crisis. That is not something we want to repeat,” he told lawmakers.
The statement marks the clearest articulation yet of Fed policy toward the cryptocurrency industry under Warsh, who is widely described as the first crypto-native Fed Chair and uses Bitcoin’s price as a gauge of whether monetary policy is appropriately positioned.
Stablecoin Reserve Requirements
Warsh’s testimony comes as the Federal Reserve prepares to publish final rules implementing the GENIUS Act, stablecoin legislation enacted in 2025. The law requires full reserves backing each stablecoin and mandates that stablecoin holders be paid ahead of other creditors when an issuer fails. A Saturday deadline, July 19, marks when the Fed’s rules are due.
The $310 billion stablecoin market has grown substantially under existing regulatory frameworks. Warsh’s comments suggest the Fed intends the GENIUS Act framework to function as a structural safeguard, reducing the likelihood of a crisis that might trigger systemic intervention.
Ambiguity on Extraordinary Risks
Warsh’s position, however, contains a notable qualification. He declined to offer an absolute pledge against intervention, telling lawmakers the Fed would act to limit “extraordinary” risks over the next four years. American Banker reported that Warsh declined to rule out any future step-in, language that leaves interpretive space for Fed action in a severe systemic event.
Warsh served as a Federal Reserve governor under Chairman Ben Bernanke and helped design the 2008 financial crisis rescue effort. The Fed’s balance sheet currently stands at $6.7 trillion.
Warsh testified before the Senate Banking Committee on July 15, the day after his House appearance. He has not publicly specified what criteria would trigger intervention or how the Fed defines “extraordinary” risks in the cryptocurrency context.
