Senator Warren Warns Treasury and Fed Against Bitcoin Bailout

In a letter dated February 19, 2026, the senator cautioned Treasury Secretary Scott Bessent and Federal Reserve Chair Jerome Powell against deploying public funds to stabilize Bitcoin after its price fell roughly 50–60% from October 2025 highs, briefly touching levels near $60,000.

The warning comes at a sensitive moment for the digital asset sector, which has been grappling with heavy volatility and mounting losses among large institutional and insider holders.

Wealth Transfer and Conflict Concerns

In her letter, Warren argued that any federal effort to support Bitcoin prices would effectively amount to a redistribution of wealth from ordinary Americans to a small group of crypto billionaires. She warned that emergency purchases, guarantees, or special liquidity facilities aimed at propping up digital assets would socialize losses after years of private gains.

The senator also pointed to potential conflicts of interest, noting that intervention could indirectly benefit President Donald Trump’s family-linked crypto venture, World Liberty Financial. According to Warren, the optics of government stabilization while politically connected entities operate in the same market raise serious ethical concerns.

Recent developments surrounding World Liberty Financial added urgency to her argument. The firm reportedly sold around 173 wrapped Bitcoin to cover approximately $11.75 million in debt as prices slid below $63,000, avoiding potential liquidation pressure.

Heavy Losses Across Crypto Leaders

Warren highlighted the broader financial impact of the downturn, citing significant paper losses among prominent crypto figures. Shares tied to Michael Saylor declined sharply, while major industry leaders such as Changpeng Zhao and Brian Armstrong saw billions erased from their net worth as market valuations contracted.

The broader backdrop includes heightened scrutiny over whether U.S. authorities would ever consider stepping in to stabilize digital asset markets during severe drawdowns.

Testimony Sparks Questions

Warren’s letter follows February 6 testimony from Secretary Bessent before the House Financial Services Committee. When asked directly whether taxpayer money could be used to support crypto markets, Bessent said the government was retaining seized Bitcoin but stopped short of issuing a definitive rejection of potential future intervention. Warren characterized the response as evasive.

The timing of the letter also coincided with the “World Liberty Forum” at Mar-a-Lago on February 18, an event that brought together crypto executives and policymakers supportive of digital asset expansion.

Officials Respond Cautiously

A Federal Reserve spokesperson confirmed receipt of the letter but declined further comment. Chair Powell has previously stated, in late 2024 remarks, that the Fed is not legally permitted to own Bitcoin and has no intention of seeking that authority.

The Treasury Department has maintained that any Bitcoin held by the government stems from asset seizures rather than taxpayer-funded purchases, framing such holdings as government property rather than active market support.

With Bitcoin still trading far below its late-2025 peak, the debate now centers on whether digital assets should remain entirely subject to market forces – or whether political and financial pressures could reshape that principle during deeper downturns.

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