The market was blindsided by the sudden news that President Donald Trump named Kevin Warsh as his choice for the next Federal Reserve chairman, ending a months-long guessing saga.
The US dollar rallied, bitcoin fell and the stock market became volatile as the news broke; Although the market may have stabilized a bit for now, uncertainty still looms over traders across all asset classes.
So who is Kevin Warsh and, more importantly, how will his leadership shape the future of monetary policy and crypto?
Former Fed Governor
Kevin Maxwell Warsh is a former governor of the United States Federal Reserve who served from 2006 to 2011 and played a leading role during the 2008 global financial crisis, including as a key liaison between the Fed and financial markets.
Before joining the central bank, Warsh worked at Morgan Stanley and served in the George W. Bush administration as special assistant to the president for economic policy and executive secretary of the National Economic Council, giving him experience on Wall Street and in Washington.
After leaving the Fed, Warsh became a visiting scholar at Stanford University’s Hoover Institution, where he wrote extensively on monetary policy, central bank credibility, and what he saw as the long-term risks of prolonged expansion of central bank balance sheets.
It’s worth noting here that while the appointment spooked the market and Bitcoin, Federal Reserve Chairman Jerome Powell – whose second four-year term expires on May 15, 2026 – is eligible to remain on the Fed Board of Governors until January 31, 2028. Warsh still needs to be confirmed by the Senate before assuming this role, but a vacancy created by the expiration of Governor Stephen Miran’s temporary term on January 31 2026. could allow him to join the board of directors before May.
The Bitcoin vision
Warsh’s appointment attracted significant attention from digital asset investors – at least initially – given his long-held views on monetary discipline and his skepticism of bitcoin’s role as a currency.
While Warsh is not personally concerned, his track record has led many market participants to view him as potentially bearish for Bitcoin and other risk assets. He is widely seen as favoring monetary discipline, higher real rates and a smaller Fed balance sheet, all of which oppose a liquidity-rich environment that has historically supported risky assets.
So how does it relate to cryptography?
First, let’s take a look at what he said previously about Bitcoin.
In a public commentary in 2015, Warsh approached bitcoin and cryptocurrencies primarily from a monetary policy perspective, expressing skepticism about their use as a stable medium of exchange while recognizing the potential of blockchain technology.
“The technology behind this white paper, it’s just software,” Warsh said in a video chat with Stanley Drukenmiller. “It’s just the latest, coolest software that will give us the opportunity to do things we never could have done before.”
While recognizing that all software can be used for good and evil, Warsh said that by building it here in the United States, it gives us the opportunity to be more productive and create something very special over the next decade…”
At one point in the conversation with the billionaire hedge fund manager and his former colleague, Warsh told Drukenmiller: “You referenced Bitcoin and I thought I heard a little condescension in your voice, that people are buying Bitcoin. »
He then argued in favor of bitcoin, saying “it could provide market discipline, it could tell the world that things need to be fixed.” He also said that he considers “bitcoin to be many things, but certainly with each passing day it takes on new life as an alternative currency.”
Although the interview is from 2015, when bitcoin was still considered dangerous and mainly used for illegal activities, a lot has changed in the last eleven years. Today, the United States has a pro-crypto government, legislation is in the works to create a legal framework for digital assets, and most importantly, crypto has become too big to ignore, even for Wall Street giants.
The potential future Fed chair argued that central banks need to engage with digital currency, including considering a U.S. Central Bank Digital Currency (CBDC) to counter Bitcoin and rival China’s digital yuan. It should be noted that CBDC is a highly debated topic in the crypto community due to privacy concerns.
He also said that cryptocurrency was nothing more than “software pretending to be money.” He called cryptocurrencies a symptom of a “speculative excess” driven by accommodative monetary policy and argued that Bitcoin’s rise was largely a derivative of the “global dollar flood” and that as liquidity tightens, these assets risk losing their appeal.
“Not hostile to crypto”
Warsh also had close ties to cryptography in general.
Warsh gained attention in crypto circles for his early involvement in digital asset companies, including Bitwise Asset Management, a crypto index fund provider. Warsh was an investor in a cryptocurrency project called Basis, an algorithmic central bank. He also served as an advisor to Electric Capital, a venture capital firm focused on crypto, blockchain and fintech.
Market analysts covering crypto said Warsh’s policy outlook, which emphasizes institutional credibility and monetary discipline, could impact liquidity conditions affecting risk assets such as Bitcoin.
Warsh is not a crypto-evangelist, but has expressed a nuanced and pragmatic position on innovation and regulation. Analysts view him as cautious about the volatility of private cryptocurrencies and as more focused on systemic financial stability than defending unregulated markets.
While criticizing its use as currency, Warsh admitted that bitcoin could potentially serve as a “durable store of value, like gold.” However, he maintains that its boom-bust cycles are speculative and may portend “increased market volatility” for financial assets overall.
“Warsh is not seen as crypto-hostile, and the prospect of a new Fed chair seen as more prone to rate cuts could trigger a near-term rally in risk assets,” said market analyst and Adlunam founder Jason Fernandes.
“However, without a real macroeconomic justification for easing, such a measure will be met with skepticism and accepted,” Fernandes added.
