Fed Chair Kevin Warsh told the House Financial Services Committee that the central bank will not rescue crypto or stablecoins if the sector suffers a run. He held the benchmark rate at 3.5% to 3.75% and pushed back on the idea of a repeat of the Fed’s 2008 backstops.
Federal Reserve Chair Kevin Warsh drew a firm line on digital assets during his first congressional testimony since taking the job, telling the House Financial Services Committee on Tuesday that the Fed has no interest in bailing out crypto or stablecoins during a market run. The message set clear boundaries without signaling broad hostility to the sector.
Sherman presses Warsh on a crypto run
The exchange came from Rep. Brad Sherman, D-Calif., a longtime skeptic of digital assets, who asked whether the Fed would support cryptocurrency or stablecoin markets the way it backstopped money market funds during the 2008 crisis. Warsh pointed to his own history with that period, saying he still has the scars from the 2008 financial crisis and that he and his colleagues do not want to repeat those extraordinary efforts.
Sherman pressed him to rule out a rescue of stablecoins and crypto specifically. Warsh answered in broader terms instead of naming the sector. According to Bitcoin News, Warsh told the panel: “We do not want to be in the bailout business, full stop.”
He left room to act on the margins, telling Sherman the Fed would do everything it can to mitigate extraordinary risks over the next four years while working to avoid bailing out anybody, including crypto. Sherman said Warsh had not fully answered, then flagged Kraken’s application with the Federal Reserve Bank of Kansas City as a concern over nonbank access to the payment system.
Inflation and a rate held steady
Inflation dominated much of the hearing. Warsh described inflation as a choice rather than an unavoidable outcome, saying the committee has no tolerance for persistently elevated price gains. The Fed held its benchmark rate at 3.5% to 3.75% at its June meeting, his first as chair.
Prediction markets stayed split on whether another move is coming. On Tuesday afternoon, Polymarket assigned a 52% probability that the Fed will raise the rate in 2026, down from 66% a day earlier, while Kalshi put the odds at 48%. Warsh also tied strong business investment to the inflation picture, noting equipment investment rose about 8% over the year ending in the first quarter, largely from AI-linked data center construction.
What it means for crypto
The takeaway for traders is one of limits rather than opposition. Warsh did not oppose digital assets broadly, but he made plain that stress in the sector will not draw the liquidity facilities the Fed extended in 2008. Bitcoin reached an intraday high of $64,913 by 11:30 a.m. EDT on Tuesday as U.S. equities extended their recovery.
Warsh’s testimony sets the tone for his Senate Banking Committee appearance on Wednesday.
Source: Bitcoin News
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