Can the Government ‘Bail Out’ Bitcoin? Congressman Prompts Bizarre Exchange With Treasury Secretary

During a recent high-stakes congressional hearing focused on Treasury oversight and financial stability, an unexpected and highly unusual exchange unfolded between a Republican Congressman and Treasury Secretary Janet Yellen regarding the regulatory boundaries and risks of cryptocurrencies. The core of the confusion centered on the hypothetical intervention of the U.S. government in the event of a catastrophic collapse of Bitcoin’s market value.

The Congressman reportedly posed a direct, albeit ill-informed, question to Secretary Yellen: Given the precedents set during previous financial crises, such as bank failures, would the U.S. government step in to ‘bail out’ Bitcoin investors if the value of the leading cryptocurrency plummeted to zero or near-zero, thereby mitigating widespread financial losses?

Secretary Yellen appeared visibly taken aback by the premise, which conflates a decentralized, non-backed digital asset with a systemically important financial institution or a regulated banking entity. She stressed that the Treasury’s financial stability mechanisms and the tools available to the Federal Reserve are designed to protect depositors and maintain the operational continuity of regulated banks and financial markets, not to compensate investors in volatile, speculative commodities.

She clarified that Bitcoin, unlike a regulated bank, has no central corporate entity, no deposits to insure, and operates entirely outside the traditional safety nets funded by taxpayers. The notion of a government bailout for a commodity-like asset is ‘conceptually impossible’ within the existing regulatory framework. While Yellen strongly advocated for comprehensive regulation over crypto exchanges and stablecoins to protect consumers from fraud, the exchange underscored the deep learning curve facing many legislators who struggle to differentiate between decentralized assets and regulated financial services when discussing market risks. The interaction served as a clear reminder that the risks inherent to speculative tokens are borne entirely by the investors.

Source: Can the Government ‘Bail Out’ Bitcoin? Congressman Prompts Bizarre Exchange With Treasury Secretary