Federal Reserve: no Bitcoin bailout in case of crash

Should Bitcoin ever drop to very low levels, bear in mind that the new Federal Reserve Chair, Kevin Warsh, refuses to bail out crypto companies or stablecoin issuers. Although Kevin himself is a strong believer in crypto, he stated this week that crypto companies should not count on bailouts.

Strategy

Just as in 2008, when banks required massive sums of money, it has recently been suggested in the US press that MicroStrategy, the largest corporate holder of Bitcoin, might need a bailout if the price of Bitcoin falls further in the coming months, or the company could go bankrupt.

Consequently, Kevin Warsh, the new Federal Reserve Chair, was asked whether crypto companies could count on such a bailout should Bitcoin prices continue to decline.

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

According to Warsh, stablecoin issuers will also not receive government financial support if their companies go bankrupt, a clear warning to Circle and Tether.

“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.”