- Warren asked Treasury and Fed to confirm no taxpayer crypto bailouts.
- Her letter followed a roughly 60% bitcoin decline since October and cascading liquidations.
- Warren cited World Liberty Financial’s bitcoin sales to repay USDC debt and losses among major holders.
- She urged stronger investor protections after $17 billion was lost or stolen in crypto in 2025.
Senator Elizabeth Warren has asked the U.S. Treasury and Federal Reserve to clarify that federal agencies will not use public funds to support cryptocurrency markets or rescue distressed investors, as Bitcoin’s recent volatility exposes vulnerabilities among large holders and leveraged positions.
In a letter sent to Treasury Secretary Scott Bessent and Federal Reserve Chair Jerome Powell, Warren warned that any intervention to stabilize crypto markets could benefit a narrow group of investors while exposing taxpayers to financial risk. The request comes after Bitcoin declined sharply from its recent peak, triggering margin pressure and forced asset sales across parts of the digital asset sector.
Warren also raised concerns about potential conflicts of interest tied to politically connected crypto ventures, arguing that government support could distort markets and undermine public trust in financial oversight.
Warren Presses Treasury, Fed on Crypto Intervention Limits
Warren requested written confirmation that neither the Treasury nor the Federal Reserve plans to purchase crypto assets, extend guarantees, or establish liquidity facilities to support cryptocurrency prices. Such measures, she argued, would amount to indirect bailouts for private investors.
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Her letter referenced recent congressional testimony from Secretary Bessent, who declined to categorically rule out intervention scenarios when asked about crypto market stress. That ambiguity, Warren said, has created uncertainty about whether federal authorities can step in during periods of severe market disruption.
The Treasury and the Federal Reserve have broad financial stability tools, including emergency lending programs and liquidity facilities, which are traditionally used to stabilize banks and credit markets. However, their application to decentralized digital assets remains undefined.
Bitcoin Volatility Exposes Leverage and Institutional Risk
The market backdrop reflects heightened stress following Bitcoin’s pullback, which forced some institutional participants to unwind leveraged positions. Public blockchain data shows instances of large crypto holders selling tokenized Bitcoin holdings to repay debt obligations and avoid liquidation, highlighting the role leverage continues to play in amplifying market swings.
The broader crypto sector has also faced mounting scrutiny following a rise in fraud, hacks, and financial losses over the past year, which has increased pressure on regulators to define clearer boundaries between market risk and government responsibility.
Neither the Treasury nor the Federal Reserve has issued a formal response to Warren’s request. Their eventual position could influence investor expectations, particularly during periods of heightened volatility, when questions about systemic risk and government intervention resurface.
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