Bitcoin faces a brutal irony as the Treasury refuses to save BTC from its own political success

Treasury Secretary Scott Bessent advised Congress he has no authority to bail out Bitcoin. The change got here throughout a Senate Banking Committee listening to, when Senator Brad Sherman requested whether or not the Treasury might intervene to help cryptocurrency costs.

Bessent’s reply was direct: he can’t use taxpayer {dollars} to purchase Bitcoin, and the query falls exterior his mandate as chair of the Financial Stability Oversight Council.

Sherman’s query was a problem, not a coverage proposal. Could the President Donald Trump administration use taxpayer cash to prop up property aligned with the president’s pursuits?

Bitcoin, together with Trump-branded tokens, sat at the heart of that concern.

The query itself reveals an irony that the Bitcoin group spent 15 years attempting to keep away from. Bitcoin launched in 2009 as a response to financial institution bailouts, a system designed to function with out a central authority and to be insulated from authorities intervention.

Now it sits shut sufficient to political pursuits that members of Congress ask whether or not the authorities may step in.

The irony runs deeper than rhetoric. If the US ever “bails out crypto,” it will not occur by shopping for Bitcoin. It will occur by defending the plumbing Bitcoin now depends on.

What a bailout truly means

The phrase “bailout” combines three distinct actions into a single time period.

The first is direct value help: the authorities buys an asset to stop its value from falling. This is what Sherman’s query implied: whether or not the Treasury would step in as a purchaser of final resort when Bitcoin drops.

The second is liquidity backstops for intermediaries. The authorities supplies emergency funding or ensures to establishments that facilitate buying and selling, custody, or settlement. This protects market functioning somewhat than asset costs.

The Federal Reserve used this method throughout the 2008 monetary disaster, lending to banks and sellers to maintain credit score markets operational.

The third is stabilizing adjoining markets on which crypto relies upon. If a stablecoin run forces mass liquidation of Treasury payments, policymakers can intervene to defend short-term funding markets. Bitcoin advantages not directly as a result of the greenback rails it makes use of stay intact.

Bessent’s “no authority” reply applies cleanly to the first case. There is not any standing authorized mechanism for the Treasury to spend taxpayer cash to purchase Bitcoin for value help.

The different two circumstances function in a totally different authorized and political universe.

What the US already does

The US already holds Bitcoin it seized throughout felony investigations.

In March 2025, Trump signed an executive order establishing a US authorities Bitcoin reserve constructed from cash seized in felony and civil forfeiture circumstances. The order frames the reserve as a “digital Fort Knox,” mandates that seized Bitcoin not be bought, and directs Treasury and Commerce to discover “budget-neutral” methods to purchase further Bitcoin.

The distinction issues. The US accumulates Bitcoin as a byproduct of legislation enforcement, not as a coverage software to handle crypto costs. Holding forfeited property is legally and politically totally different from deploying taxpayer funds to prop up a unstable market.

This creates a brilliant line: the authorities as a passive holder versus the authorities as an energetic purchaser to stop declines. Crossing that line requires specific congressional authorization.

Why Bitcoin itself resists bailouts

Classic bailouts goal entities with steadiness sheets, regulated liabilities, and failure modes that cascade by means of credit score markets.

The authorities recapitalizes a financial institution by injecting fairness, backstopping deposits, or guaranteeing short-term funding. Each of those actions addresses a contractual obligation that, if left unhappy, might set off broader monetary misery.

Bitcoin has no issuer, no steadiness sheet, and no contractual liabilities to backstop. It is a protocol, not an establishment. For policymakers to “bail out crypto,” they might find yourself bailing out the establishments round it, such as banks, cash market funds, cost processors, stablecoin issuers, clearing and settlement nodes, somewhat than the asset itself.

This is the core structural drawback: you can’t recapitalize a protocol the approach you recapitalize a financial institution.

Bessent’s “no authority” reply is shorthand for the absence of a authorized mechanism.

Changing that requires Congress to act. Senate Bill 954, the “BITCOIN Act of 2025,” gives a template for what specific authorization would appear to be.

The invoice proposes that the Treasury buy a million Bitcoins over 5 years and maintain them in belief. This isn’t present legislation, however a proposed legislation that might create the authority Bessent says he lacks.

The pathway from “no authority immediately” to “authority tomorrow” runs by means of an overt congressional vote. Lawmakers would have to go on document supporting taxpayer purchases of a unstable asset with no money flows, no regulatory oversight, and no conventional valuation framework.

“Bailout” kind	What it’s	Who/what will get supported	What it means for BTC value	Who has authority
Direct value help	Treasury (or one other company) buys BTC to cease/sluggish a drop	The asset itself	Direct buyer-of-last-resort impact	Would require specific congressional authorization/appropriation
Liquidity backstop for intermediaries	Emergency funding/ensures to banks/sellers/market utilities tied to crypto plumbing	The establishments that custody/clear/finance	Indirect (helps market perform; doesn’t “purchase BTC”)	Typically Fed/Treasury instruments with authorized constraints; not “Treasury buys BTC”
Stabilize adjoining markets (Treasuries/funding)	Intervention to maintain T-bills / cash markets functioning throughout a run (e.g., stablecoin redemptions)	Treasury market + short-term funding rails	Indirect (retains greenback rails intact)	Standard financial-stability mandate lanes

The implicit bailout that might truly occur

If the US ever bails out crypto, the probably route is to defend infrastructure that has turn out to be system-linked.

The first pathway runs by means of stablecoins and Treasury markets. Stablecoin issuers maintain monumental quantities of short-term US authorities debt. S&P Global Ratings estimates that dollar-pegged stablecoin issuers held roughly $155 billion in Treasury bills by the finish of October 2025.

Tether alone circulates over $185 billion in USDT, in accordance to information from Artemis. The Financial Stability Oversight Council’s 2025 annual report explicitly flags the want to monitor how stablecoin regulation impacts Treasury market construction, functioning, and demand.

If a main stablecoin confronted a run and had to liquidate T-bills at scale, policymakers might step in to stabilize the Treasury market, which is inside their mandate, somewhat than “save Bitcoin.”

Crypto would profit as a result of the dollar infrastructure it relies on would stay operational.

The intervention would goal authorities securities and short-term funding markets, not cryptocurrency. However, the sensible impact could be an implicit bailout of the crypto ecosystem’s plumbing.

The second pathway includes emergency liquidity to systemically vital intermediaries.

The Federal Reserve’s emergency authority below Section 13(3) of the Federal Reserve Act permits it to present liquidity throughout “uncommon and exigent circumstances.”

The Congressional Research Service notes that the Fed has traditionally used this authority to help market functioning by means of broadly based mostly services, typically with Treasury credit score safety backing the applications.

If crypto plumbing ever turned entangled with core funding markets, by means of prime brokerage relationships, settlement networks, or collateralized lending, emergency liquidity might move to eligible monetary establishments.

The Fed wouldn’t lend to the Bitcoin community. It would lend to banks and market utilities that facilitate crypto buying and selling and settlement.

The third pathway is regulatory somewhat than monetary. Policymakers can scale back the likelihood of a disaster by adjusting guidelines somewhat than deploying money.

This consists of permitting banks to intermediate stablecoins extra simply, clarifying reserve composition necessities, or easing settlement constraints so redemptions clear easily.

These actions do not contain taxpayer funds, however they perform as a type of “bailout by regulation.”
The irony Bitcoin cannot escape

Bitcoin was designed to eradicate the want for trusted intermediaries and insulate cash from authorities management.

Satoshi Nakamoto’s white paper cited the 2008 monetary disaster as proof that the present system required an excessive amount of belief. The protocol was designed to function with out bailouts as a result of it could not depend on banks.

Fifteen years later, Bitcoin trades on centralized exchanges, settles by means of regulated intermediaries, and more and more depends on stablecoins backed by the identical Treasury securities that anchored the monetary system it was created to substitute.

If a disaster ever forces the authorities to step in, it will not be to save Bitcoin. It will likely be to save the establishments and markets Bitcoin now is dependent upon.

The bailout Bitcoin cannot get is a direct taxpayer buy. The bailout it’d get is the one designed to defend the whole lot else.

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