US Senator Introduces Crypto Bill Blocking Federal Bailouts for Digital Assets

The legislation is cosponsored by U.S. Senators Elizabeth Warren (D-MA), Peter Welch (D-VT), Bernie Sanders (I-VT), Tina Smith (D-MN), and Mazie Hirono (D-HI). It also receives endorsements from consumer advocacy groups: Consumer Federation of America, American Economic Liberties Project, Americans for Financial Reform, Consumer Action, National Association of Consumer Advocates, National Consumer Law Center on behalf of its low-income clients, National Consumers League, Public Citizen, and Woodstock Institute.

Further provisions in the bill prohibit the use of federal funds to guarantee or stabilize losses tied to digital asset activities, including through programs administered by the Federal Reserve or the Federal Deposit Insurance Corp. The legislative text also limits eligibility for assistance even when crypto-focused firms maintain affiliations with federally insured institutions, aiming to prevent indirect access to government backstops. It also specifies that federal banking regulators cannot waive these restrictions through existing emergency authorities, tightening constraints on discretionary intervention. Additional language in the measure clarifies that firms with substantial digital asset exposure would be evaluated based on primary business activity, narrowing potential loopholes in eligibility determinations.

The measure also reflects broader congressional concern over spillover risks to insured depository institutions and the financial system, particularly where interconnected exposures could transmit instability. By reinforcing boundaries between speculative activity and federally protected finance, the bill seeks to preserve confidence in existing safety nets without extending them to digital asset losses. Durbin stressed:

“My simple legislation would ensure that taxpayers aren’t left holding the bag for this shady industry.”