U.S. Senator Elizabeth Warren (D-MA) has taken a firm stance against the use of taxpayer dollars to stabilize Bitcoin or bail out struggling cryptocurrency firms amid a significant downturn in the market. In a letter addressed to Treasury Secretary Scott Bessent and Federal Reserve Chair Jerome Powell, Warren called upon both agencies to ensure that they refrain from using taxpayers’ money to support the cryptocurrency industry, which has faced heightened scrutiny as its prices continue to plummet.
Warren’s letter highlights concerns regarding the potential for government intervention during this volatile period, especially considering the authorities that both the Treasury and the Federal Reserve possess which allow them to provide financial support during times of market stress. She expressed her concerns, stating that it remains “deeply unclear what, if any, plans the U.S. government currently has to intervene in the current Bitcoin selloff.” The price of Bitcoin has seen a drastic decline of approximately 50% since reaching a peak in October. This decline has been exacerbated by cascading liquidations of leveraged positions, leading to significant unease among major investors and companies heavily involved with Bitcoin.
Currently, Bitcoin is trading slightly under $67,000, with market speculation predicting a further decline to around $55,000, according to user data from prediction market Myriad. The discussion surrounding a potential bailout of the cryptocurrency market is being heightened by the federal government’s efforts to consider a more comprehensive approach to digital assets within the financial sector. Some states have begun exploring the establishment of strategic Bitcoin reserves, while proposals have emerged to allow Bitcoin to be included in certain public pension portfolios.
In her communication, Warren cautioned that any government support would disproportionately benefit wealthy investors and industry insiders, arguing that such a bailout would be extremely unpopular among the general public. She emphasized that it would amount to transferring wealth from American taxpayers to wealthy cryptocurrency investors, potentially lining the pockets of President Trump and his family through their connections to various crypto ventures, including World Liberty Financial.
Warren referenced recent transactions involving World Liberty Financial, which reportedly sold 173 wrapped Bitcoin to settle outstanding debts and avert liquidation as prices dipped below $63,000. Furthermore, she pointed to the reported losses faced by several prominent figures in the cryptocurrency space as indicators of the inherent risks involved in the market.
This is not the first time Warren has voiced her criticism of the cryptocurrency industry this month. Earlier remarks underscored her concerns about consumer protection within the sector, stating, “No one should celebrate when Americans lose their hard-earned money.” She urged for the implementation of commonsense consumer protections to mitigate the risks posed to small traders and retirees, warning that without regulatory oversight, crypto billionaires might prioritize their interests while passing losses onto vulnerable investors.
At a recent House Financial Services Committee hearing, Bessent reaffirmed the position that the government does not have the authority to implement a federal strategic Bitcoin reserve or utilize public funds to stabilize the cryptocurrency market. He clarified that while the Treasury retains seized Bitcoin, there is no legal mechanism in place that allows banks to invest in Bitcoin or direct taxpayer money into cryptocurrency assets for market stabilization.
