Bitcoin Magazine
Fed Chair Warsh: No Bailout for Crypto Industry in Crisis
Federal Reserve Chair Kevin Warsh told the House Financial Services Committee on July 14 that the central bank will decline to rescue the cryptocurrency industry in a crisis, a message he delivered during his first semiannual monetary policy testimony as chair.
The exchange came from Rep. Brad Sherman (D-CA), a longtime crypto skeptic, who asked whether the Fed would backstop failing digital-asset firms the way it supported money market funds in 2008. Warsh rejected the premise. “We do not want to be in the bailout business, full stop,” he said. He added, “We want to be in a position where we’re not bailing out anybody, including crypto.”
Warsh, who took office May 15 and presided over his first FOMC meeting in June, framed the stance through his own history.
As a Fed governor under Chairman Ben Bernanke, he helped design the 2008 rescue effort. “I still have the scars from the 2008 financial crisis,” he said. “That is not something we want to repeat.” He argued that the post-crisis bailouts bred moral hazard, and he wants to spare digital assets the same fate.
For a market that spent years seeking legitimacy alongside traditional finance, the comments draw a hard line. Warsh, described as the first crypto-native Fed chair, has treated Bitcoin as a gauge rather than a ward of the state. During his nomination hearing he called Bitcoin “not a substitute for the U.S. dollar,” and he has used its price as a thermometer for whether monetary policy sits in the right place.
The warning lands days before a pivotal deadline. Rules to implement the GENIUS Act, the stablecoin law enacted in 2025, are due Saturday, and Warsh confirmed the Fed is “racing” to publish its proposals on time.
The statute pays stablecoin holders ahead of other creditors when an issuer fails and requires full reserves behind each coin. With the stablecoin market near $310 billion, Sherman pressed the point that a run on one issuer could spread across the sector.
Warsh declined to offer an absolute pledge. He told lawmakers the Fed would act to limit “extraordinary” risks over the next four years, language that leaves room for intervention in a systemic event. American Banker noted that he declined to rule out any future step-in.
At the Senate Banking Committee the following day, Warsh urged banking regulators to coordinate on GENIUS Act rulemaking to prevent regulatory arbitrage, a race that lets firms hunt for the lightest oversight.
He paired that call with a defense of Fed independence on monetary policy and a pledge to shrink a balance sheet that sits near $6.7 trillion.
The takeaway for crypto is a market-discipline era: the Fed will set the rules of the road, yet firms that overreach will bear the cost of their own failures. For an industry that courted federal backing, Warsh’s message asks it to stand on its own.
This post Fed Chair Warsh: No Bailout for Crypto Industry in Crisis first appeared on Bitcoin Magazine and is written by Micah Zimmerman.
Which is worse, sailing your superyacht through the city where your company just made mass job cuts, or getting named to a U.S. Federal Reserve panel on jobs and productivity three days after announcing thousands of layoffs?
It might not be a full Zuck, but Microsoft Xbox CEO Asha Sharma is getting lots of attention, and not in a good way, for the latter this week.
Sharma was named Thursday to co-lead a new Federal Reserve “Productivity and Jobs” task force, charged with assessing the economic impact of AI and other new technologies on the labor market. Her co-leaders: Marc Andreessen, the venture capitalist and vocal AI booster, and Stanford economist Charles I. Jones, who is currently on leave at Anthropic, maker of the Claude AI chatbot.
The gaming press, as you can imagine, is having a field day. The headline from Kotaku sums it up: “Xbox CEO Will Advise Federal Reserve On Jobs After Mass Layoffs.”
PC Gamer, for its part, noted that the task force is supposed to represent a “commitment to price stability and maximum employment.” However, that’s the Fed’s broad mandate, as described by Chairman Kevin Warsh. It’s actually not the specific mission of the Productivity and Jobs task force, which is narrower: assessing what AI and other new technologies are doing to the economy.
In a separate sign of the backlash, Microsoft communications chief Frank Shaw took to X on Friday to knock down claims that the Xbox cuts were made to replace employees with foreign workers, calling it “bad information” and noting that the H-1B visa figures being cited are company-wide renewals, not Xbox-specific. He also pointed out that Sharma is “an American born, raised, and educated CEO, from Wisconsin.”
Also lost in the coverage of the Fed appointment is the fact that Sharma is less than five months into the job, having taken over as Xbox CEO in February with a mandate to turn around and preserve a gaming division that spent more than $20 billion over five years while its core revenue shrank. The restructuring announced this week is a key part of that effort.
What’s more, it’s hard to imagine that this is the timing Microsoft or Sharma wanted. Announcements like this are often outside the control of the participants. The Federal Reserve sets its own schedule.
Still, it’s tough timing for an executive who announced plans this week to cut 3,200 gaming jobs — about 1,600 immediately, with the rest over the coming year — amounting to roughly 20% of Xbox’s workforce. Sharma herself called it the most significant restructuring in the division’s history.
Meta CEO Mark Zuckerberg’s superyacht Launchpad, for the record, is currently cruising the waters off Juneau, Alaska, a full 900 miles from Seattle.
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