President Donald Trump has announced that he will nominate former Federal Reserve Board member Kevin Warsh to lead the U.S. central bank.
In a Jan. 30 post on Truth Social, the president acknowledged the selection, writing:
I’ve known Kevin for a long time, and I have no doubt that he will go down as one of the great Fed chairs, perhaps one of the best. Above all he is “core casting” and will never let you down.
Trump’s move comes after months of internal wrangling over who will replace Chairman Jerome Powell, whose term ends in May. Mr. Warsh, 55, served on the Federal Reserve Board from 2006 to 2011 and later worked in economic policy, finance and academia.
His return to the central bank is seen by industry observers as a shift from Powell to a leader more willing to shrink the Fed’s balance sheet and rein in liquidity. This outcome typically weighs on speculative assets, even if the path of policy rates ultimately becomes more dovish.
Meanwhile, the nomination comes as investors are already trying to factor in a leadership change into the 2026 interest rate path. The Fed held interest rates on hold this week, pausing its easing cycle, and interest rate futures point to June as the next likely rate cut under the next chairman.
Rate cut candidates with balance sheet plans
President Trump has repeatedly criticized Powell for not lowering interest rates more quickly and has expressed a desire for a chairman to work on lowering borrowing costs.
That message resonates with households facing rising mortgage rates and a White House focused on growth and the cost of federal funds.
However, Mr. Warsh’s appointment cannot be interpreted as simply to “lower interest rates.”
While his current stance on interest rates is that they should fall and that AI-driven innovation will help curb inflationary pressures, his background at the Fed is important for how markets handicap the risks of quick easing.
At the time, Mr. Warsh took a tougher stance on inflation than his latest commentary suggests.
This contrast has led some investors to view him as a moderate choice unlikely to pursue aggressive cuts immediately.
Notably, this tension is most clearly evident in the dollar’s reaction. Robin Brooks, a senior fellow at the Brookings Institution, wrote that Warsh is “really qualified” to chair the Fed and is known as a hawk.
But Brooks said the market is trying to buy into Warsh’s promise, which is why the dollar (after a sharp decline in recent days) has not risen despite news that would normally support an upward trend.
On the other hand, some macro commentary further pushed the “two levers” theory.
Macromicro, a financial analysis platform, summarized the expected changes as “shrinking the Fed and easing interest rates,” framing it as a paradox between hawks and doves.
This approach signals a broader shift from demand management to a supply-side growth model, with aggressive balance sheet reductions in exchange for modest interest rate cuts.
Warsh’s attitude towards cryptocurrencies: Software first, dollars first
Warsh has not consistently promoted himself as a champion of cryptocurrencies, and in his public writings he often separates blockchain infrastructure from the concept of private tokens that function as money.
In a 2022 Wall Street Journal op-ed, Warsh argued that “cryptocurrency” is a misnomer and is primarily software. At the same time, he called on the US to pursue a stronger “digital dollar” approach tied to privacy and dollar competitiveness.
According to him:
“The United States should announce the essential design features of a digital dollar that will be used only for wholesale transactions. Existing wholesale payment systems are slow, cumbersome, opaque, and expensive. The new system will more effectively mediate payments between governments, financial companies, and foreign central banks. Settlements will occur more quickly. Payments will be cheaper. Cross-border transfers will be seamless. Currency creation will be more transparent.”
In the case of Bitcoin, that framing helps both ways. On the other hand, the Fed chair, who treats cryptocurrencies primarily as a technology, may feel more comfortable modernizing the payments pipeline and clarifying how regulated institutions interact with tokenized rails, a development that benefits stablecoins, custody, and on-chain payments.
On the other hand, his dollar-first mentality and tacit support for wholesale central bank digital currencies (CBDCs) disguised as digital dollars don’t really fit with the Bitcoin-as-alternative-currency storyline.
Still, crypto industry figures such as Bitwise CEO Hunter Horsley portray Warsh as a key supporter of the industry.
They describe him as a crypto advocate, citing his role as an advisor and claiming he understands the macro story of Bitcoin, has invested in crypto, fintech, and AI companies, and brings understanding to policymakers about how liquidity and regulation intersect.
Notably, Warsh’s comments regarding emerging industries further complicate that stance.
In a widely circulated video on X, Warsh pushed back at what he called condescending remarks about Bitcoin buyers, saying Bitcoin “doesn’t make me nervous” and suggesting it could provide “market discipline” by pointing to the need to solve macroeconomic problems.
In the same remarks, he explained that the underlying technology in the Bitcoin White Paper is software, and that building that technology in the United States could improve productivity over the next decade, before adding that Bitcoin is taking on new life as an alternative currency.
Approval battle doubles as Fed independence test
Warsh’s nomination faces hurdles as it requires Senate confirmation, and Democrats say the move is part of President Trump’s broader control over one of the few remaining independent federal agencies.
Sen. Thom Tillis described Warsh as a qualified candidate with deep financial policy expertise, but vowed to oppose confirmation.
Mr. Tillis said he would block nominations to the Federal Reserve Board until the Justice Department concluded its investigation into Mr. Powell, arguing that the investigation threatened the central bank’s independence and amounted to legal intimidation.
he said:
“The Department of Justice continues to pursue a criminal investigation into Chairman Jerome Powell based on committee testimony that no reasonable person could interpret as criminal intent. Protecting the Federal Reserve’s independence from political interference or legal intimidation is non-negotiable.”
But Warsh’s supporters argue that his profile could strengthen rather than weaken the organization.
Mohamed A. El-Erian, Rene M. Khan Professor of Practice at Wharton, said Mr. Warsh brings a powerful combination of deep expertise, broad experience, and sharp communication skills to reform and modernize the Fed.
According to El-Erian, this bodes well for increasing policy effectiveness and protecting the institution’s political independence.
Some skeptics, however, say Warsh’s nomination could create friction with President Trump’s push for rapid deregulation.
In a post to
The company writes:
“The president is at risk of being deceived.”
In the case of Bitcoin, the keys are likely to be commonplace rather than crypto-specific. Traders will listen to Mr. Warsh discuss balance sheets, desired reserve levels, and the sequence of rate cuts and quantitative tightening.
These details will determine whether a chair arguing for lower interest rates will ease overall financial conditions or will result in a combination of measures that still constrain liquidity.
(Tag translation) Bitcoin
