Federal Reserve Chair Kevin Warsh has drawn a firm line on the central bank's role in the digital asset sector.
During a recent congressional hearing, he told investors that the Fed has no intention of rescuing cryptocurrency firms in the event of a financial crisis.
Warsh said the Federal Reserve's goal is to prevent systemic risks rather than provide emergency support after problems emerge. "We do not want to be in the bailout business," Warsh said. "We want to be in a position where we aren't bailing out anyone, including crypto."
Crypto has "a place" in U.S. finance
During his Senate confirmation hearing in April, Warsh made it clear that cryptocurrencies should not exist outside the financial system. Instead, he views crypto as part of modern finance.
"Digital assets are already part of the fabric of our financial services industry in the United States," Warsh told lawmakers.
At the same hearing, Warsh also opposed the creation of a U.S. central bank digital currency (CBDC). According to the Fed boss, it is "a bad policy choice." This aligns with the stance of most Republican congressmen.
Independence, AI, and inflation
Tuesday's hearing focused on inflation and the broader economy. Warsh cautioned against reading too much into June's inflation report, arguing that a single month's data does not signal victory over inflation.
"It's one data point.... I don't want to overread or cherry-pick data," Warsh said. "There might be some who look at this morning's data and say, 'Well, mission accomplished, everything is swell.' That is not my view."
He reiterated that returning inflation to the Fed's 2% target remains the central bank's top priority and pledged to remain independent of political pressure. During the hearing, Warsh also reflected on the previous Fed chairs.
"I've known five of my predecessors, I've learned particular lessons from each of them, I can only be my own man."
The Fed chair also expressed optimism about artificial intelligence, arguing that the technology could significantly improve U.S. productivity.
"America will be richer," and more productive from this AI cycle if historical technology trends repeat.
At the same time, he warned that the United States must keep pace with rapid advances in quantum computing.
"We've got enormous talent at the federal level, but we have to move with it," Warsh said, describing quantum technology as an area requiring greater national attention.
