Bitcoin faces a brutal irony as the Treasury refuses to save BTC from its own political success
Treasury Secretary Scott Bessent told Congress he has no authority to bail out Bitcoin. The exchange came during a Senate Banking Committee hearing, when Senator Brad Sherman asked whether the Treasury could intervene to support cryptocurrency prices.
Bessent’s answer was direct: he cannot use taxpayer dollars to buy Bitcoin, and the question falls outside his mandate as chair of the Financial Stability Oversight Council.
Sherman’s question was a challenge, not a policy proposal. Could the President Donald Trump administration use taxpayer money to prop up assets aligned with the president’s interests?
Bitcoin, along with Trump-branded tokens, sat at the center of that concern.
The question itself reveals an irony that the Bitcoin community spent 15 years trying to avoid. Bitcoin launched in 2009 as a response to bank bailouts, a system designed to operate without a central authority and to be insulated from government intervention.
Now it sits close enough to political interests that members of Congress ask whether the government might step in.
The irony runs deeper than rhetoric. If the US ever “bails out crypto,” it won’t happen by buying Bitcoin. It will happen by protecting the plumbing Bitcoin now relies on.
What a bailout actually means
The word “bailout” combines three distinct actions into a single term.
The first is direct price support: the government buys an asset to prevent its price from falling. This is what Sherman’s question implied: whether the Treasury would step in as a buyer of last resort when Bitcoin drops.
The second is liquidity backstops for intermediaries. The government provides emergency funding or guarantees to institutions that facilitate trading, custody, or settlement. This protects market functioning rather than asset prices.
The Federal Reserve used this approach during the 2008 financial crisis, lending to banks and dealers to keep credit markets operational.
The third is stabilizing adjacent markets on which crypto depends. If a stablecoin run forces mass liquidation of Treasury bills, policymakers can intervene to protect short-term funding markets. Bitcoin benefits indirectly because the dollar rails it uses remain intact.
Bessent’s “no authority” answer applies cleanly to the first case. There is no standing legal mechanism for the Treasury to spend taxpayer money to buy Bitcoin for price support.
The other two cases operate in a different legal and political universe.
What the US already does
The US already holds Bitcoin it seized during criminal investigations.
In March 2025, Trump signed an executive order establishing a US government Bitcoin reserve built from coins seized in criminal and civil forfeiture cases. The order frames the reserve as a “digital Fort Knox,” mandates that seized Bitcoin not be sold, and directs Treasury and Commerce to explore “budget-neutral” ways to acquire additional Bitcoin.
The distinction matters. The US accumulates Bitcoin as a byproduct of law enforcement, not as a policy tool to manage crypto prices. Holding forfeited assets is legally and politically different from deploying taxpayer funds to prop up a volatile market.
This creates a bright line: the government as a passive holder versus the government as an active buyer to prevent declines. Crossing that line requires explicit congressional authorization.
Why Bitcoin itself resists bailouts
Classic bailouts target entities with balance sheets, regulated liabilities, and failure modes that cascade through credit markets.
The government recapitalizes a bank by injecting equity, backstopping deposits, or guaranteeing short-term funding. Each of these actions addresses a contractual obligation that, if left unsatisfied, could trigger broader financial distress.
Bitcoin has no issuer, no balance sheet, and no contractual liabilities to backstop. It is a protocol, not an institution. For policymakers to “bail out crypto,” they would end up bailing out the institutions around it, such as banks, money market funds, payment processors, stablecoin issuers, clearing and settlement nodes, rather than the asset itself.
This is the core structural problem: you cannot recapitalize a protocol the way you recapitalize a bank.
Bessent’s “no authority” answer is shorthand for the absence of a legal mechanism.
Changing that requires Congress to act. Senate Bill 954, the “BITCOIN Act of 2025,” offers a template for what explicit authorization would look like.
The bill proposes that the Treasury purchase one million Bitcoins over five years and hold them in trust. This is not current law, but a proposed law that would create the authority Bessent says he lacks.
The pathway from “no authority today” to “authority tomorrow” runs through an overt congressional vote. Lawmakers would have to go on record supporting taxpayer purchases of a volatile asset with no cash flows, no regulatory oversight, and no traditional valuation framework.
| “Bailout” type | What it is | Who/what gets supported | What it means for BTC price | Who has authority |
|---|---|---|---|---|
| Direct price support | Treasury (or another agency) buys BTC to stop/slow a drop | The asset itself | Direct buyer-of-last-resort effect | Would require explicit congressional authorization/appropriation |
| Liquidity backstop for intermediaries | Emergency funding/guarantees to banks/dealers/market utilities tied to crypto plumbing | The institutions that custody/clear/finance | Indirect (supports market function; doesn’t “buy BTC”) | Typically Fed/Treasury tools with legal constraints; not “Treasury buys BTC” |
| Stabilize adjacent markets (Treasuries/funding) | Intervention to keep T-bills / money markets functioning during a run (e.g., stablecoin redemptions) | Treasury market + short-term funding rails | Indirect (keeps dollar rails intact) | Standard financial-stability mandate lanes |
The implicit bailout that could actually happen
If the US ever bails out crypto, the most likely route is to protect infrastructure that has become system-linked.
The first pathway runs through stablecoins and Treasury markets. Stablecoin issuers hold enormous amounts of short-term US government debt. S&P Global Ratings estimates that dollar-pegged stablecoin issuers held roughly $155 billion in Treasury bills by the end of October 2025.
Tether alone circulates over $185 billion in USDT, according to data from Artemis. The Financial Stability Oversight Council’s 2025 annual report explicitly flags the need to monitor how stablecoin regulation affects Treasury market structure, functioning, and demand.
If a major stablecoin faced a run and had to liquidate T-bills at scale, policymakers could step in to stabilize the Treasury market, which is within their mandate, rather than “save Bitcoin.”
Crypto would benefit because the dollar infrastructure it relies on would remain operational.
The intervention would target government securities and short-term funding markets, not cryptocurrency. However, the practical effect would be an implicit bailout of the crypto ecosystem’s plumbing.
The second pathway involves emergency liquidity to systemically important intermediaries.
The Federal Reserve’s emergency authority under Section 13(3) of the Federal Reserve Act allows it to provide liquidity during “unusual and exigent circumstances.”
The Congressional Research Service notes that the Fed has historically used this authority to support market functioning through broadly based facilities, often with Treasury credit protection backing the programs.
If crypto plumbing ever became entangled with core funding markets, through prime brokerage relationships, settlement networks, or collateralized lending, emergency liquidity could flow to eligible financial institutions.
The Fed would not lend to the Bitcoin network. It would lend to banks and market utilities that facilitate crypto trading and settlement.
The third pathway is regulatory rather than financial. Policymakers can reduce the probability of a crisis by adjusting rules rather than deploying cash.
This includes allowing banks to intermediate stablecoins more easily, clarifying reserve composition requirements, or easing settlement constraints so redemptions clear smoothly.
These actions don’t involve taxpayer funds, but they function as a form of “bailout by regulation.”
The irony Bitcoin can’t escape
Bitcoin was designed to eliminate the need for trusted intermediaries and insulate money from government control.
Satoshi Nakamoto’s white paper cited the 2008 financial crisis as proof that the existing system required too much trust. The protocol was designed to operate without bailouts because it would not rely on banks.
Fifteen years later, Bitcoin trades on centralized exchanges, settles through regulated intermediaries, and increasingly relies on stablecoins backed by the same Treasury securities that anchored the financial system it was created to replace.
If a crisis ever forces the government to step in, it won’t be to save Bitcoin. It will be to save the institutions and markets Bitcoin now depends on.
The bailout Bitcoin can’t get is a direct taxpayer purchase. The bailout it might get is the one designed to protect everything else.
