Donald Trump has announced his nomination of Kevin Warsh, former Federal Reserve Governor, as the next chair of the Federal Reserve. The move comes as Jerome Powell's term is set to end in May 2026. Trump conveyed his decision via a post on his Truth Social platform, expressing confidence that Warsh would be "one of the GREAT Fed Chairmen, maybe the best".
Warsh, 55, served on the Federal Reserve Board of Governors from 2006 to 2011, navigating the tumultuous period of the 2008 financial crisis. A fellow at Stanford's Hoover Institution and a former Morgan Stanley banker, Warsh is a well-known figure in policymaking circles. He was also considered for the Fed chair position in 2017.
The nomination has been interpreted by some as an attempt by Trump to exert greater influence over the traditionally independent central bank. Throughout his second term, Trump has been critical of the Fed and has openly pressured Powell to lower interest rates.
Warsh's views on monetary policy have been described as hawkish, with a focus on tighter policy and a smaller Fed balance sheet. This stance has led to some concerns that his appointment could result in higher real interest rates and reduced liquidity, potentially impacting asset prices, including Bitcoin. Some analysts, like Markus Thielen, founder of 10x Research, believe the market views Warsh's potential appointment as a negative factor for Bitcoin. Bitcoin's value has already seen a decline amid speculation of Warsh's nomination.
Despite his perceived hawkishness, Warsh has also expressed relatively positive views on Bitcoin, referring to it as a potential "sustainable store of value, like gold" in a Wall Street Journal opinion piece from 2018. He has, however, been critical of Bitcoin's volatility and the broader digital asset boom, particularly when fueled by aggressive central bank stimulus. While not overtly anti-Bitcoin, he has referred to private cryptocurrencies as "software that pretends to be money".
Warsh's involvement in the crypto space extends to investments in projects like Basis, an algorithmic stablecoin initiative, and his role as an advisor to Electric Capital. These activities indicate a familiarity with and interest in the development of algorithmic financial systems. In 2022, Warsh penned an op-ed advocating for the development of a U.S. Central Bank Digital Currency (CBDC) to compete with China's digital yuan.
The nomination now heads to the Senate for confirmation. If confirmed, Warsh will succeed Jerome Powell, whose term expires in May. Other candidates who were reportedly considered for the position included National Economic Council Director Kevin Hassett, current Fed Governor Christopher Waller, and BlackRock fixed-income chief Rick Rieder.
