Federal Reserve chairman Kevin Warsh told the House Financial Services Committee on July 14 that the central bank will refuse to save the cryptocurrency industry from the crisis, a message he gave during the first semiannual monetary policy testimony as chair.
The exchange came from Rep. Brad Sherman (D-CA), a long-time crypto skeptic, who questioned whether the Fed would go back to the failure of digital asset companies in the way it supported market capitalization in 2008. Warsh rejected the idea. “We don’t want to be in the business of a bailout, a freeze,” he said he said. He added, “We want to be in a place where we don’t pay anyone, including crypto.”
war, who took office on May 15 and presided over his first FOMC meeting in June, he established this in his history.
As Fed governor under Chairman Ben Bernanke, he helped engineer the bailout of 2008. “I still have the scars of the 2008 financial crisis,” he said. “It’s not something we want to repeat.” He also said that post-crisis bailouts lead to moral hazard, and he wants the digital economy not to crash.
For a market that spent years searching for legitimacy alongside traditional currencies, the reviews are difficult. Warsh, he explained as the Fed’s first crypto-native chair, he has taken Bitcoin as a gauge instead of a ward of the government. At his election conference he called Bitcoin “not a replacement for the US dollar,” and has used its value as a thermometer for whether the monetary policy is in the right place.
Warsh chimes on the GENIUS Act dictate the deadline
The warning comes just days before the deadline. The rules for implementing the GENIUS Act, the stablecoin law enacted in 2025, are because Saturdayand Warsh confirmed that the Fed is “in a hurry” to publish its opinion on time.
The law pays stablecoin owners ahead of other creditors when the issuer has failed and requires all the reserves behind each coin. With the stablecoin market close to $310 billion, Sherman emphasized the fact that a run on one issuer can spread across the entire region.
Warsh refused to make an absolute promise. He told lawmakers that the Fed would take steps to reduce “extraordinary” risks over the next four years, language that leaves room for systemic intervention. American Banker also said it refused to block futures.
At the Senate Banking Committee the next day, Warsh he encouraged Bank regulators to agree on GENIUS Act rules to avoid unfair competition, which allows companies to seek lighter supervision.
He joined the call by defending the Fed’s monetary policy and a promise to cut the balance sheet by about $6.7 trillion.
Crypto craze is a time to sell the market: The Fed will set traffic rules, but companies that spend money will pay the price for their failures. For companies that are supported by the government, Warsh’s message is asking them to stand up for themselves.
