No bailout for cryptocurrency, FRB Chair states in congressional testimony
On the 14th, Kevin Waller, Chair of the Federal Reserve Board (FRB), indicated during a hearing of the U.S. House Financial Services Committee that there would be no bailouts for the cryptocurrency industry even if it were to face a crisis. This was his first appearance before Congress as FRB Chair.
When asked by Democratic Congressman Brad Sherman about the response if a stablecoin issuer were to fail and a bank run occurred across the industry, Chair Waller stated, “We do not want to engage in bailout operations; that is the crux of the matter.”
He continued, “We will do everything we can to mitigate such extreme risks. We want to be in a position where no one, including cryptocurrencies, is bailed out.”
Avoiding Clear Commitments, Focus on Past Crisis Responses
Chair Waller has a history of involvement in crisis response as a member of the FRB during the 2008 financial crisis under then-Chair Ben Bernanke, and he has long been critical of large-scale asset purchases and the emergency lending programs during the COVID-19 pandemic in 2020.
In this testimony, he avoided specific references to how far the FRB might activate its emergency lending authority (under Section 13(3) of the Federal Reserve Act) in the future.
Democratic Congresswoman Maxine Waters, a member of the House Financial Services Committee, also questioned him about the issue of government officials profiting from the cryptocurrency industry under their supervision, but Chair Waller avoided providing a clear answer on this point.
First Semiannual Congressional Testimony Since Taking Office as FRB Chair
Waller was confirmed by the Senate and took office as FRB Chair on May 15. This testimony is based on the “Monetary Policy Report,” which requires the FRB Chair to appear before Congress every six months, and he is scheduled to testify before the U.S. Senate Banking Committee the following day on the 15th.
Regarding cryptocurrency and stablecoins, the deadline for the FRB to establish a regulatory framework under the Genius Act is approaching on July 18, and this issue may also be addressed in future congressional testimonies.
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