Treasury Secretary Declares No Authority for Bitcoin Bailout Amidst Senate Hearing
In a recent Senate Banking Committee hearing, Treasury Secretary Scott Bessent firmly stated that he lacks the authority to orchestrate a bailout for Bitcoin. This statement came in response to a query from Senator Brad Sherman regarding the possibility of the Treasury intervening to bolster cryptocurrency prices.
Bessent’s straightforward answer highlighted the constraints of his office: taxpayer dollars cannot be utilized to purchase Bitcoin, and such actions fall beyond his responsibilities as chair of the Financial Stability Oversight Council. Sherman’s inquiry, while not a formal policy proposal, raised significant concerns about whether the Trump administration could leverage taxpayer resources to support assets closely associated with the President’s interests, particularly Bitcoin and Trump-branded tokens.
The irony of the situation is notable. Bitcoin was introduced in 2009 as a rebuttal to the need for bank bailouts, creating an ecosystem designed to thrive without centralized authority or government involvement. Now, Bitcoin finds itself intertwined with political dynamics to the extent that Congressional members are questioning the government’s potential role in its support.
Yet, if the government were ever to "bail out crypto," it would likely not take the form of direct Bitcoin purchases. Instead, protective actions would likely focus on safeguarding the underlying infrastructure that Bitcoin now depends on.
Understanding the Concept of a Bailout
The term "bailout" encompasses three primary actions:
Direct Price Support: This implies the government purchasing an asset, such as Bitcoin, to prevent its value from declining.
Liquidity Backstops for Intermediaries: In this scenario, the government provides emergency financing or guarantees to entities that facilitate trading, custody, or transactions, safeguarding market functionality rather than the asset’s price.
- Stabilization of Adjacent Markets: Here, the government would intervene to maintain the functionality of related markets during crises. For instance, if a run on stablecoins led to large-scale liquidation of Treasury bills, policymakers could step in to stabilize these funds.
Bessent’s "no authority" response clearly applies to the first scenario, pointing out that legal frameworks do not currently exist for direct Treasury purchases of Bitcoin. The latter two scenarios operate under different legal and political conditions.
Existing U.S. Actions Regarding Bitcoin
Interestingly, the U.S. government already possesses Bitcoin that has been seized during criminal investigations. An executive order signed by Trump in March 2025 established a government reserve of Bitcoin obtained through forfeiture cases, presenting it as a "digital Fort Knox." Notably, this order restricts the sale of seized Bitcoin and directs federal agencies to identify cost-neutral methods for acquiring additional Bitcoin.
This distinction is critical: the U.S. accumulates Bitcoin as a result of law enforcement actions rather than as a measure to stabilize cryptocurrency prices. The government acts as a passive holder rather than undertaking proactive buyer roles, which would necessitate explicit Congressional approval.
The Resistance of Bitcoin to Traditional Bailouts
Typical bailouts focus on organizations with financial structures, liabilities, and resulting impacts on broader credit markets. For example, government intervention to recapitalize a failing bank may involve injecting equity or backstopping deposits to honor contractual obligations.
In contrast, Bitcoin operates fundamentally differently. It lacks an issuer, balance sheet, or contractual liabilities, functioning solely as a decentralized protocol. Therefore, to mitigate a financial setback in the cryptocurrency market, government actions would need to emphasize support for associated institutions rather than Bitcoin itself.
Bessent’s answer reflects this nuanced understanding of legal limitations.
Potential Legislative Pathways
For the government to gain authority over potential Bitcoin interventions, Congress would need to act decisively. Currently, the "BITCOIN Act of 2025," aims to introduce explicit authorization for the Treasury to acquire up to one million Bitcoins over five years, creating the legal foundation Bessent claims is currently absent.
Transitioning from “no authority today” to “authority tomorrow” necessitates an overt vote in Congress, where lawmakers would publicly endorse taxpayer-funded purchases of a highly volatile asset without traditional valuation criteria.
A Look at Implicit Bailouts
If the U.S. were ever to enact any form of bailout for the cryptocurrency sector, it would likely manifest as protection for its interconnected infrastructure rather than as a direct infusion into Bitcoin itself.
One potential route involves stablecoins, which hold substantial amounts of U.S. Treasury debt. S&P Global Ratings estimated around $155 billion in Treasury bills held by dollar-pegged stablecoin issuers as of late 2025.
For example, Tether circulates over $185 billion in USDT, consequently making the stability of Treasury bills essential. If a substantial stablecoin were to experience a liquidity crisis and needed to liquidate T-bills in bulk, policymakers would intervene to maintain market stability—effectively safeguarding Bitcoin indirectly by keeping the dollar-based system operational.
Conclusion
The very essence of Bitcoin was to avoid reliance on trusted intermediaries and ensure that money remains insulated from governmental oversight. Satoshi Nakamoto’s vision highlighted trust issues during the 2008 financial crisis, leading to the creation of a system without the need for bailouts.
However, as the market has evolved, Bitcoin now operates within a framework of centralized exchanges and depends on stablecoins that are intertwined with the traditional financial system it aimed to upend.
In a potential crisis, government intervention would not seek to save Bitcoin directly but would rather focus on maintaining the institutions and market structures that have become vital to its existence. The notion of a direct taxpayer-funded Bitcoin bailout remains unattainable, while the possibility of regulatory bailouts designed to preserve the overall crypto ecosystem remains very much on the table.
