Crypto-Friendly Kevin Warsh Confirmed as Fed Chair to Replace Jerome Powell

The U.S. Senate confirmed Kevin Warsh on Wednesday as the next chair of the Federal Reserve, clearing a pathway for him to take over the central bank’s reins.

Following months of tension marked by President Donald Trump’s pressure campaign against Fed Chair Jerome Powell, lawmakers voted 54-45 in favor of Warsh. A Department of Justice investigation into Powell, recently closed, had become a barrier for some officials in supporting Warsh’s nomination.

Although Warsh has called some crypto projects fraudulent and worthless, he disclosed earlier this year investments in crypto-native projects such as Polymarket and Solana. In an interview published earlier this year, he also said that Bitcoin “does not make me nervous.”

The price of Bitcoin was little changed following Warsh’s confirmation, hovering around $79,500, according to CoinGecko.

Sen. Cynthia Lummis (R-WY) was among pro-crypto politicians that welcomed the Senate’s confirmation of Warsh. She said in an X post that “American businesses and digital asset holders finally have a leader at the Fed who is ready to deliver it.”

Last month, Warsh affirmed to Lummis during a Senate hearing that he thinks digital assets should be incorporated into America’s finance industry. Warsh said that digital assets are “already part of the fabric of our financial services industry.”

Warsh’s confirmation also received a blessing from Mike Selig, the CFTC chair that has come out in defense of prediction markets this year amid several state lawsuits. “I look forward to working together,” Selig said in a post to X.

Following the expiration of Powell’s eight-year term, Warsh is now expected to lead a Fed that has wrestled with elevated levels of inflation for years. At the same time, Powell indicated that he would remain a voting member of the Federal Open Market Committee, aiming to defend the institution against what he described as “unprecedented” legal attacks.

Powell’s remarks focused on the central bank’s ability to conduct monetary policy “without considering political factors.” Meanwhile, Federal Reserve Governor Lisa Cook is engaged in a high-stakes legal battle with the president, who is attempting to remove her from her position over alleged mortgage fraud.

Warsh has signaled an openness to lowering interest rates; however, traders don’t expect the central bank to loosen monetary conditions at all this year. With tension in the Middle East fueling higher energy cuts, they foresee a hike as more likely this year, per CME FedWatch.

On Myriad, a prediction market owned by Decrypt’s parent company Dastan, traders penciled in a 3.7% chance of the Fed lowering interest rate by 25 basis points before July. Those odds have ticked down slightly from 4.7% over the past 30 days.

Lower interest rates tend to buoy risk assets like stocks and crypto, and on Tuesday, inflation numbers showed that consumer price rose 3.85% in the 12 months through April. Drifting away from the Fed’s 2% target, the print marked the highest reading since May 2023.

Warsh, a former Fed governor, developed a reputation as an “inflation hawk” during his previous stint at the central bank. Still, his confirmation represents a positive development for digital assets, Juan Leon, a senior investment strategist at Bitwise, told Decrypt.

“Kevin Warsh is the first Fed Chair to endorse Bitcoin and describe it as a useful signal for policymakers, reflecting a shift in institutional legitimacy for crypto,” he said. “While he’s known as an inflation hawk, his stated belief that rates can move lower as a result of AI-driven productivity gains provide a plausible path to more accommodative liquidity conditions for crypto assets.”

Editor’s note: This story was updated after publication with additional details and an analyst comment.