Lawmakers in the United States are intensifying efforts to prevent taxpayer money from being used to bail out cryptocurrency companies. On March 19, 2026, U.S. Senator Richard Durbin (D-IL) introduced the 'No Bailout for Crypto Act,' a bill designed to prohibit federal agencies from providing emergency support to entities primarily engaged in digital asset trading, custody, or issuance. The legislation draws a clear line between digital asset risks and traditional financial safety nets.
Key Provisions: Closing Federal Bailout Channels
The bill stipulates that no federal funds may be used to guarantee or stabilize losses related to digital asset activities, including through programs administered by the Federal Reserve or the Federal Deposit Insurance Corp. Even if crypto-focused firms have ties to federally insured depository institutions, indirect access to government backstops would be restricted. The legislation also bars federal banking regulators from waiving these restrictions using existing emergency powers, significantly limiting discretionary intervention. Furthermore, the bill directs that firms with substantial exposure to digital assets be examined based on their primary business activity, closing potential loopholes in eligibility definitions.
Senator Durbin stated: 'When crypto crashes, hardworking Americans shouldn't be on the hook to bail out a failed industry—just like they were during the 2008 financial crisis. It punishes working Americans who did nothing wrong.' He added: 'My simple bill will ensure taxpayers are not left holding the bag for this predatory industry.'
Broad Political Support and Endorsements
The bill is co-sponsored by Senators Elizabeth Warren (D-MA), Peter Welch (D-VT), Bernie Sanders (I-VT), Tina Smith (D-MN), and Mazie Hirono (D-HI). It has also received endorsements from several 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. These groups collectively argue that the high risks of the cryptocurrency industry should not be transferred to taxpayers.
Mitigating Moral Hazard and Systemic Risk Spillover
The proposal reflects growing congressional concern that crypto risks could spill over to insured depository institutions and the broader financial system through interconnected exposures. By reinforcing the boundary between speculative activity and federally protected finance, the bill aims to maintain trust in existing safety nets without extending them to digital asset losses. It emphasizes accountability within the crypto sector, ensuring that participation in volatile markets does not create expectations of a federal rescue, thereby addressing moral hazard.
Analysts suggest that if passed, the act would significantly alter the risk landscape for crypto markets: investors could face greater downside risk as government intervention expectations vanish, and banks may become more cautious in their dealings with crypto firms since indirect bailout channels are cut off. Senator Durbin concluded: 'My simple bill will ensure taxpayers are not left holding the bag for this predatory industry.'