President Donald Trump has nominated former Federal Reserve governor Kevin Warsh as the next Fed chair, a move that has unsettled cryptocurrency markets. Warsh's history of favoring tighter monetary policy has led to fears of reduced liquidity for risk assets like bitcoin. Despite his skepticism toward bitcoin as money, Warsh has shown support for blockchain innovation and invested in crypto ventures.
The nomination of Kevin Warsh, announced by President Donald Trump, ended speculation about the Federal Reserve's leadership and immediately impacted financial markets. The U.S. dollar strengthened, bitcoin prices dropped, and equity markets experienced heightened volatility following the news. This reaction stems from Warsh's reputation for advocating stricter monetary policies, including higher real interest rates and a reduced Fed balance sheet—conditions that could challenge assets reliant on abundant liquidity.
Kevin Warsh served as a Federal Reserve governor from 2006 to 2011, playing a pivotal role during the 2008 financial crisis as a liaison between the Fed and markets. Prior to that, he worked at Morgan Stanley and in the George W. Bush administration as Special Assistant to the President for Economic Policy. After leaving the Fed, Warsh joined Stanford University’s Hoover Institution as a visiting fellow, where he critiqued prolonged central bank balance-sheet expansion.
Warsh's views on cryptocurrencies are nuanced. In a 2015 conversation with Stanley Druckenmiller, he described bitcoin as “software pretending to be money” and a symptom of speculative excess fueled by loose policy. Yet, he praised its underlying technology, calling it “the newest, coolest software” with potential for productivity gains. Warsh suggested bitcoin could provide market discipline and serve as an alternative currency, even comparing it to a store of value like gold, though he warned of its volatility.
Despite his reservations, Warsh has ties to the crypto sector. He invested in Bitwise Asset Management and the algorithmic stablecoin project Basis, and advised Electric Capital, a venture firm focused on blockchain and fintech. He has urged central banks to explore digital currencies, including a U.S. central bank digital currency to compete with rivals like China’s digital yuan.
Current Fed Chair Jerome Powell’s term ends on May 15, 2026, but he can stay on the board until January 2028. Warsh’s nomination requires Senate confirmation, though he could join the board earlier via a vacancy. Analysts like Jason Fernandes of Adlunam note that “Warsh is not viewed as hostile to crypto,” but emphasize that any easing would need macroeconomic backing to sustain rallies in risk assets.
