Warren Urges Fed and Treasury to Reject Crypto Bailout, Warns It Could Enrich Trump-Linked Firm
Sen. Elizabeth Warren sent a letter to Treasury Secretary Scott Bessent and Federal Reserve Chair Jerome Powell urging them not to use taxpayer-backed interventions to stabilize Bitcoin or the wider crypto market. Warren argued any bailout would disproportionately benefit crypto billionaires and could directly enrich President Trump’s family-linked crypto firm, World Liberty Financial (WLFI). The letter followed a congressional hearing where Bessent said the Treasury was retaining seized Bitcoin and discussed asset diversification by banks; Warren called the response a deflection and demanded agencies refrain from direct purchases, guarantees, or liquidity facilities for cryptocurrencies. The note comes amid a >50% drop in Bitcoin from its October all-time high and a local low around $60,000 on Feb. 6, and coincided with WLFI hosting a crypto forum at Mar-a-Lago. Warren emphasized that government intervention would transfer wealth from taxpayers to wealthy crypto stakeholders and asked regulators to avoid propping up digital-asset prices.
Bearish
Warren’s public call for regulators to refuse any bailout increases political and regulatory scrutiny on crypto and signals a low likelihood of near-term government support. Traders often price in the prospect of official backstops; removing that possibility raises perceived tail risk and downside pressure. The letter underscores concerns about favoritism and fiscal cost, which could harden regulatory stances. Combined with an ongoing >50% BTC correction from October highs and recent price weakness (~$60k local low), this reduces investor confidence and may prompt risk-off flows. In the short term expect higher volatility and downward pressure on BTC and correlated altcoins as traders reassess the chance of intervention and de-risk. In the medium to long term, clearer rule-setting and potential crackdowns could restructure capital allocation within the sector—negative for highly speculative tokens but neutral-to-positive for projects with clear compliance and institutional pathways. Historical parallels: statements and regulatory crackdowns (e.g., 2018–2019 enforcement waves, 2022 FTX fallout) produced sustained selloffs and liquidity squeezes until regulatory clarity or renewed institutional demand returned.