Kevin Warsh twice declined to assure Congress that the Federal Reserve would not rescue stablecoin issuers in a run, telling the House Financial Services Committee only that the central bank does not want to be in the bailout business.
Warsh Twice Declines To Rule Out Fed Support if Stablecoins Face a Run
15 July 2026 - 13:09 CEST
By Stu Clelland
The exchange came during the Fed chairman's first congressional testimony since taking office in May, delivering the semiannual Monetary Policy Report on Tuesday. He appears before the Senate Banking Committee today.
Question about precedent
Brad Sherman, a California Democrat, built the question on what the Fed has already done. The central bank stood behind money market funds in the last crisis, and his argument was that a stablecoin is much the same instrument, describing it as a money market fund that pays no interest and hides everything. If the Fed backstopped one, he asked, would it backstop the other.
Warsh answered by reaching for 2008, saying he still carries the scars of the crisis and that it is not something the Fed wants to repeat.
Pressed for an assurance that he would not bail out stablecoins and crypto, he broadened it instead. "We do not want to be in the bailout business full stop," he said.
Asked a third time, he said the Fed would work to mitigate such risks and "want[s] to be in a position we're not bailing out anybody, including crypto."
Both are statements of intent rather than commitments, and Sherman said so. "You're not really answering the question," he told the chair, before moving on to bank capital rules.
Four days from a deadline
The timing of this exchange is significant, as Saturday, 18 Jul is the statutory deadline for agencies to issue rules implementing the GENIUS Act, the federal stablecoin law signed a year ago. The Fed is among those with work outstanding, and as of 9 Jul, every implementing rule across the agencies remained at the proposed stage on the Federal Register; none were finalized.
Warsh raised none of it himself. His prepared testimony, published by the Fed, does not mention stablecoins, digital assets or the GENIUS Act. It deals with inflation, the artificial intelligence investment boom and five task forces he has established. The subject reached the record only because members raised it.
Before his confirmation in May, Warsh disclosed and then divested holdings in a bitcoin payments company, the index manager Bitwise and a stablecoin venture.
