Senator Warren Calls on Treasury and Federal Reserve to Block Any “Crypto Bailout”
Washington, D.C., Feb. 19 — Senator Elizabeth Warren, the ranking member of the Senate Banking Committee, has sent a formal letter to Treasury Secretary Scott Bessent and Federal Reserve Chair Jerome Powell urging them not to use taxpayer funds to support the cryptocurrency market. The correspondence warns that a government‑backed rescue would “transfer wealth from American taxpayers to cryptocurrency billionaires” and could indirectly benefit President Donald Trump’s private crypto venture, World Liberty Financial.
Background
- Bitcoin’s steep decline: The leading digital asset has slipped more than 50 % from its October 2023 peak, trading around $60,000 on Feb. 6, a low that has reignited debate over the sector’s stability.
- Trump‑linked event: On the same day Warren’s letter was dispatched, World Liberty Financial hosted its inaugural “World Liberty Forum” at Mar‑a‑Lago, bringing together crypto executives and pro‑industry policymakers.
Content of the Letter
Warren’s missive stresses that any federal intervention—whether through direct purchases of Bitcoin, liquidity facilities, or guarantees—would disproportionately favor a small group of crypto investors while burdening the public. She also cites a recent Financial Stability Oversight Council (FSOC) report and a Feb. 4 hearing in which Treasury officials were questioned about their authority to “bail out” digital assets.
Key excerpts from the letter include:
- A warning that a government‑backed stabilization effort would “enrich cryptocurrency billionaires at the expense of taxpayers.”
- A request that the Treasury and Federal Reserve “refrain from propping up Bitcoin or related tokens through direct purchases, guarantees, or liquidity facilities.”
Treasury’s Response at the Hearing
During the FSOC hearing, Rep. Brad Sherman asked Secretary Bessent whether the Treasury possessed the power to intervene in the crypto market, mentioning both Bitcoin and the so‑called “Trumpcoin.” Bessent responded that the agency could hold various assets as part of banks’ diversification strategies, but he clarified that the seized Bitcoin currently held by the Treasury is a government asset, not tax money.
Warren characterizes Bessent’s answers as a “deflection,” arguing that the administration has offered no clear plan for addressing the ongoing market sell‑off.
Political and Market Implications
- Potential conflict of interest: Critics point to the timing of the World Liberty Forum and the alleged ties between the Trump family’s crypto venture and any proposed federal assistance.
- Regulatory uncertainty: The absence of a definitive policy on government involvement in crypto markets adds to investor anxiety, especially as major tokens continue to lose value.
- Legislative pressure: Warren’s outreach reflects growing bipartisan scrutiny over the federal government’s role in digital assets, a debate that could shape forthcoming legislation or regulatory frameworks.
Reactions
- Treasury and Fed: Both agencies have acknowledged receipt of the letter. The Federal Reserve declined to comment further, while the Treasury has not issued a public response.
- Industry response: Crypto firms have largely remained silent, awaiting clarification on whether any official rescue measures are forthcoming.
Key Takeaways
- Warren is urging a hard line: The senator wants the Treasury and Fed to avoid any direct financial support to the crypto sector, framing it as a taxpayer protection issue.
- No official bailout plan yet: As of now, the administration has not announced any concrete steps to intervene in the market decline.
- Potential political friction: The letter raises concerns about possible benefits to Trump‑linked crypto entities, adding a partisan dimension to the policy discussion.
- Regulatory landscape remains fluid: Ongoing hearings and reports suggest the government is still evaluating its authority and approach to digital assets.
The discourse around a possible crypto bailout is likely to intensify as market volatility persists and lawmakers continue to grapple with the appropriate scope of federal involvement in the burgeoning digital‑currency ecosystem.
Source: https://cointelegraph.com/news/warren-urges-fed-treasury-not-to-bail-out-crypto-billionaires?utm_source=rss_feed&utm_medium=feed&utm_campaign=rss_partner_inbound
