Fed Won’t Bail Out Crypto or Stablecoins, Warsh Tells Congress

Federal Reserve Chair Kevin Warsh told the House Financial Services Committee on July 14, 2026, that the Fed will not rescue cryptocurrency or stablecoins if the sector faces a run. The remarks came during Warsh’s first congressional testimony as chair.

The exchange with Rep. Brad Sherman focused on whether the Fed would provide the same support it gave money market funds in 2008. Warsh referenced his experience from that crisis and declared, “We do not want to be in the bailout business, full stop.” He added the Fed will act to limit extreme risks on the margins: “We’re going to do everything we can to mitigate those sorts of extraordinary risks, if and when they arise over the next four years. We want to be in a position where we’re not bailing out anybody, including crypto.”

The hearing was the Fed’s semi‑annual Humphrey‑Hawkins testimony. It followed a new consumer price index reading and came a day before Warsh was scheduled to appear before the Senate Banking Committee.

Warsh framed inflation as a matter of policy and said the Federal Open Market Committee has no tolerance for persistently elevated price gains. The Fed has kept its benchmark rate at a range of 3.5% to 3.75% since its June meeting, Warsh’s first as chair.

On the labor market, Warsh described conditions as balanced, citing low unemployment, relatively few layoffs and steady wage growth. He said those factors mean the Fed’s goals for inflation and employment are not currently in conflict.

Warsh pointed to business investment as a key driver of recent economic growth. Overall equipment investment rose about 8% over the year ending in the first quarter, he said, with much of the gain tied to data center construction for artificial intelligence. High‑tech spending within equipment investment increased nearly 25% on a four‑quarter basis. “It seems inevitable that what is now called ‘AI investment’ will soon be called just ‘investment,'” he said, and the Fed will monitor the effects on inflation and jobs.

The chair announced five internal task forces to review Fed practices, covering communications, balance sheet policy, sources of economic data, the effect of new technology on productivity and jobs, and inflation frameworks. Warsh said the groups will start from “a blank sheet of paper” and report to all 19 Fed policymakers before any findings are released.

Sherman also raised concerns about nonbank crypto firms seeking access to the payments system, citing a bank application by Kraken. Warsh said he will review public comments on a reproposed bank capital rule and emphasized strong capital ratios, liquidity, supervision and market discipline as elements of financial stability.

Markets reacted modestly to the testimony. Prediction markets showed roughly even odds that the Fed could raise rates later in 2026. Bitcoin traded higher on the day, reaching an intraday high near $64,900, while U.S. equities extended gains.