Fed Chair Kevin Warsh told Congress on July 14, 2026 the Federal Reserve will not bail out cryptocurrency or stablecoin markets if they face stress. Rep. Brad Sherman pressed Warsh during a House Financial Services Committee hearing on whether the Fed would extend support to digital asset markets similar to the 2008 money market fund backstop. Warsh cited his experience during the 2008 financial crisis and stated the Fed does not want to be in the bailout business, while the central bank held its benchmark rate at 3.5% to 3.75%.
Warsh Rules Out Crypto Bailouts in House Testimony
Warsh appeared before the House Financial Services Committee for the Fed's Semi-Annual Monetary Policy Report, a hearing known as the Humphrey-Hawkins testimony. The exchange on crypto came during questioning from Rep. Brad Sherman, D-Calif., who asked Warsh directly whether the Fed would extend support to cryptocurrency or stablecoin markets the way it backstopped money market funds during the 2008 financial crisis.
Warsh opened his answer by pointing to his own history with that crisis. "I still have the scars from the 2008 financial crisis," Warsh said. "We all carry the scars from the extraordinary efforts that my colleagues and I undertook under Chairman Bernanke's leadership. That is not something we want to repeat."
Sherman pressed further, asking Warsh to rule out a rescue of stablecoins and cryptocurrency specifically. Warsh told the panel: "We do not want to be in the bailout business, full stop."
Sherman noted that the Fed did step in for money market funds during the 2008 crisis and asked whether a similar shock in crypto markets would prompt the same response. Warsh held his position while leaving room for the Fed to act 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," Warsh told Sherman. "We want to be in a position where we're not bailing out anybody, including crypto."
Sherman told Warsh he had not fully answered the question, then moved on to bank capital rules. He also flagged Kraken's application with the Federal Reserve Bank of Kansas City as a concern tied to nonbank access to the payment system.
Fed Holds Rate at 3.5% to 3.75% as Warsh Calls Inflation a Choice
The Fed held its benchmark rate at a range of 3.5% to 3.75% at its June meeting, Warsh's first as chair. Warsh described inflation as a choice rather than an unavoidable outcome and noted the Fed's rate-setting committee has no tolerance for price gains staying elevated. "The members of our committee have no tolerance for persistently elevated inflation," Warsh stated. "And we share a resolute commitment to restoring price stability."
Warsh told lawmakers the labor market looks balanced, with low unemployment, few layoffs and steady wage growth, meaning the Fed's inflation and employment goals are not currently working against each other. Warsh added that sustained progress on inflation would eventually support lower long-term yields.
On Tuesday afternoon, July 14, prediction market bettors were pricing in the possibility that a rate hike could still materialize this year. Polymarket's event on the subject assigns a 52% probability that the Fed will raise the benchmark rate in 2026. Kalshi's market tracking the same question puts the odds at 48%. Polymarket's probability declined from 66% yesterday to the current 52%, while Kalshi's odds were above 60% on July 13.
![Polymarket wager on a 2026 rate hike from the Fed]()
AI Investment Drives Business Spending Growth
Warsh pointed to business investment as the standout feature of the current economy. Overall equipment investment rose about 8% over the year ending in the first quarter, driven largely by data center construction tied to artificial intelligence. High-tech spending within that category grew nearly 25% on a four-quarter basis. "It seems inevitable that what is now called 'AI investment' will soon be called just 'investment,'" Warsh said, adding that the Fed is watching what the buildout means for inflation and the labor market.
Five Task Forces Examine Fed Practices
Warsh outlined five task forces he created to examine the Fed's practices from the ground up. The groups cover Fed communications, balance sheet policy, economic data sources, the impact of new technology on productivity and jobs, and the frameworks used to think about inflation. He said the teams are starting from "a blank sheet of paper" and will report internally to all 19 Fed policymakers before any public findings are shared.
Fed independence was another theme of the hearing. Warsh emphasized the central bank's separation from political pressure, a point Sherman echoed in his opening remarks when he credited the Fed's independence with helping prevent deeper inflation damage in recent years.
Bitcoin Reaches $64,913 as Markets React to Testimony
Bitcoin continued its advance on Tuesday, reaching an intraday high of $64,913 by 11:30 a.m. EDT. U.S. equities also extended their recovery, adding to the broader rebound across risk assets.
For crypto markets, the message from Warsh was one of clear boundaries rather than open hostility. He did not signal opposition to digital assets broadly, and reporting has noted his relatively crypto-fluent background compared with past Fed chairs, along with disclosed crypto-related investments. But he made plain that market stress in the sector will not be met with the kind of liquidity facilities the Fed extended to money market funds in 2008.
Warsh is also scheduled to appear before the Senate Banking Committee on Wednesday.
FAQ
What did Fed Chair Kevin Warsh say about crypto bailouts on July 14, 2026?
Fed Chair Kevin Warsh told Congress on July 14, 2026 the Federal Reserve will not bail out cryptocurrency or stablecoin markets. During House Financial Services Committee testimony, Warsh stated "We do not want to be in the bailout business, full stop" when pressed by Rep. Brad Sherman on whether the Fed would extend support to digital asset markets similar to the 2008 money market fund backstop.
What is the current Fed interest rate according to Warsh's testimony?
The Fed held its benchmark rate at a range of 3.5% to 3.75% at its June meeting, Warsh's first as chair. Warsh told lawmakers during the July 14, 2026 hearing that the Fed's rate-setting committee has no tolerance for persistently elevated inflation and shares a resolute commitment to restoring price stability.
How did Bitcoin react to Warsh's congressional testimony?
Bitcoin continued its advance on Tuesday, July 14, reaching an intraday high of $64,913 by 11:30 a.m. EDT. U.S. equities also extended their recovery, adding to the broader rebound across risk assets following Warsh's testimony and the day's consumer price index reading.
