Sponsors (7)
The bill reduces federal fiscal exposure and discourages moral hazard by banning ESF and Fed emergency liquidity for crypto firms, but it shifts risk to customers and market participants and may cause spillovers to regulated banks and slow crypto innovation.
Taxpayers and the federal budget are less exposed because the bill bans use of the Exchange Stabilization Fund (ESF) to rescue crypto firms, reducing the likelihood of direct taxpayer-funded bailouts.
Banks and deposit insurers (and the broader regulated banking sector) are protected from being compelled to backstop failures in the digital-asset sector because the bill bars emergency Federal Reserve liquidity and ESF support for crypto entities.
Market participants and regulators face reduced moral hazard because preventing federal bailouts for digital-asset intermediaries encourages private risk management and stronger industry discipline.
Customers of digital-asset firms (retail investors and small businesses) lose access to federal backstops and emergency liquidity, increasing the risk they will suffer losses in large firm failures.
The restriction on emergency Fed liquidity for crypto-related activities could cause abrupt unwindings that spill over into regulated banks and financial markets, raising systemic risk for financial institutions and their customers.
Removing potential emergency support may constrain legitimate innovation in blockchain and DeFi, raising financing costs and slowing growth for startups, tech workers, and small crypto businesses.
Based on analysis of 2 sections of legislative text.
Prohibits the federal government from providing bailouts, emergency liquidity support, or Exchange Stabilization Fund assistance to entities, protocols, or intermediaries involved in digital asset activities. It bars federal agencies and the Federal Reserve’s emergency lending authority under section 13(3) from being used to prevent failure or bankruptcy of crypto-related firms and protocols, while preserving the Fed’s separate authority to lend to depository institutions under section 10B.
Introduced March 19, 2026 by Richard Joseph Durbin · Last progress March 19, 2026