Fed Rules Out Bailing Out Crypto, Stablecoins in Crisis

Federal Reserve Chairman Kevin Warsh has made it clear that the Fed will not bail out stablecoin or cryptocurrency enterprises in a crisis. Speaking before the House Financial Services Committee, Warsh cited his experience during the 2008 financial crisis as a reason for caution.

'I still have the scars from the 2008 financial crisis,' Warsh said. 'That is not something we want to repeat.' He added that the Fed does 'not want to be in the bailout business. Full stop.'

Warsh was asked about the possibility of setting up liquidity facilities for stablecoins or crypto if investors flocked to pull funds, as it has for money market funds in past crises.

'We're going to do everything we can to mitigate those sorts of extraordinary risks, if and when they were to come in the next four years,' Warsh said. 'We want to be in a position where we are not bailing out anybody, including crypto.'