Author: Chloe, ChainCatcher
Federal Reserve nominee Warsh attended the U.S. Senate Banking Committee confirmation hearing at 22:00 yesterday. This marks the first time since his nomination by Trump in January that Warsh has publicly articulated his monetary policy stance and central bank governance vision in an official setting.
Previously, Warsh submitted financial documents revealing his investment portfolio in the crypto industry. He holds equity in dozens of blockchain and digital asset companies, with investments spanning DeFi lending, decentralized derivatives, Layer 1 and Layer 2 networks, prediction markets, and even Bitcoin payment infrastructure. To comply with government ethics regulations, he has now pledged to divest the vast majority of these holdings.
The significance of this hearing is self-evident. For the crypto market, every statement Warsh makes could influence the direction of market liquidity.
Key Hearing Highlights: How Warsh Responded to a Series of Questions
According to previous Bloomberg reports, Trump has explicitly stated his desire for the new chair to lower interest rates. Warsh undoubtedly faced a series of questions regarding the Fed's independence, testing whether he could simultaneously appease Washington and convince financial markets that his policy direction would be based on genuine market needs.
At last night's hearing, the core question Warsh faced was: Could he maintain independence under Trump's pressure to cut rates? Warsh clearly responded that Trump never asked him to commit to cutting rates at any specific time. "The President never asked me to predetermine, commit, or lock in any rate decisions. He did not ask, nor did he pressure, and I would never agree to do so." When asked if he would become Trump's "sock puppet," Warsh flatly denied it, stating that if confirmed, he would lead the Fed as an independent actor.
However, Democratic senators were not easily convinced. Senator Ruben Gallego pointedly noted that The Wall Street Journal had reported that Trump, during a 45-minute meeting with Warsh at the White House, pressed him on whether he could be trusted to support rate cuts, and Trump himself later confirmed this report to the newspaper. Gallego bluntly stated, "Someone here is lying, either you or President Trump." Warsh responded that the reporter of the article "either needs better sources or higher journalistic standards," but he admitted that he did not request a correction at the time, nor did he address the fact that Trump personally confirmed the report to The Wall Street Journal.
Moreover, on the morning of the hearing, Trump stated more directly in an interview with CNBC that he would be "disappointed" if a Warsh-led Fed did not cut rates, while also indicating he did not intend to pressure the Justice Department to end its investigation into Powell. These comments undoubtedly added more political tension to the hearing.
Senate Banking Committee's top Democrat, Elizabeth Warren, launched the most fierce attack. In her opening remarks, she bluntly stated that Warsh was "not fit to serve as Fed Chair," accusing Trump of trying to dismantle the Fed's independence to make monetary policy serve short-term economic prosperity before the midterm elections. Warren even tested Warsh on the 2020 election results (Trump has long insisted the 2020 election was "rigged"), asking him: "Did Trump lose the 2020 election?" But Warsh consistently avoided directly stating that "Trump lost," only referring to the election results as "certified," attempting to separate political issues from the Fed's duties.
Regarding policy stances, Warsh characterized the current inflation predicament as a "fatal policy error" by the Fed, pointing out that post-pandemic prices have risen 25% to 35% overall, indicating a serious miscalculation by the Fed. He called for a "regime change," including establishing a new inflation framework, reforming communication methods, and using both interest rates and the balance sheet to tackle inflation. However, he clarified that the so-called regime change refers to a "change in policy regime," not a personnel purge, explicitly stating he would not fire regional Fed bank presidents.
Simultaneously, Warsh expressed dissatisfaction with the Fed officials' practice of pre-announcing predictions on the direction of interest rates, stating, "Too many Fed officials are pre-announcing the direction of rates for the next meeting, the next quarter, even next year. I find that quite unhelpful." He prefers "full and vigorous internal debate" at policy meetings rather than following a rehearsed script. Notably, Warsh did not commit to maintaining the current practice of holding a press conference after every FOMC meeting, suggesting that the Fed's policy transparency might undergo subtle changes in the future.
Regarding the timeline, Republican Senator Thom Tillis, while explicitly supporting Warsh for Chair, insisted that he would not allow the nomination to proceed until the Justice Department's investigation into Powell concludes. During the hearing, he urged, "Let's end this investigation so I can support your confirmation."
However, the hearing also revealed signs that some Democratic senators might support Warsh. Senator Catherine Cortez Masto responded positively after Warsh discussed re-evaluating inflation measurement methods, saying, "I hope you are right," and expressed respect for his theoretical convictions as an economist. Senator Mark Warner, who was absent from the hearing due to a family bereavement, is also seen as a potential vote in favor.
What Does This Mean for the Crypto Market?
For the crypto market, the significance of this hearing lies not only in the future path of interest rates and USD liquidity but also in how the Fed and the banking regulatory system will respond to crypto capital becoming more deeply embedded in traditional finance.
It is worth noting that while Warsh repeatedly emphasized the need for monetary policy independence during the hearing, he was unwilling to extend the same standard to banking policy and regulation. This drew strong质疑 from Warren: Against the backdrop of the Trump family extending its reach into the system through crypto finance businesses like World Liberty Financial, even applying for banking charters, could the Fed face direct pressure from the President's family business interests in the future regarding discount window access, bank准入, or regulatory discretion?
Previously, Warsh had also explicitly proposed significantly reducing the Fed's $6.7 trillion balance sheet but has yet to reveal a specific implementation plan. Multiple officials and scholars have warned him not to be too aggressive or hasty. The pace and scale of balance sheet reduction will directly impact market liquidity, which is one of the core variables for crypto asset pricing.
Furthermore, Warsh himself has a broad range of investments in the digital asset space. According to his regulatory disclosure filings, Warsh's investment portfolio includes equity in numerous companies in the decentralized finance sector, including projects like Solana, Lemon Cash, and Flashnet, as well as funds with crypto exposure. Under Fed trading rules, officials are not allowed to hold significant cryptocurrency positions, so if Warsh is formally appointed, these holdings must be divested.
It can be inferred that a Fed Chair deeply invested in the crypto industry, regardless of whether his tenure directly impacts digital asset regulation, at least意味着 the leadership is not unfamiliar with this emerging asset class. Combined with Warsh's policy倾向 towards deregulation and his ambition to reshape the Fed's economic models and communication framework, the crypto market has reason to be cautiously optimistic about this potential new Chair.
Finally, while the hearing表面上 focused on Fed independence, it was实际上 a direct confrontation over the power boundaries between the White House, Congress, and the central bank. Warsh demonstrated highly political tactics at the hearing, neither publicly contradicting Trump nor安抚 the markets by repeatedly emphasizing independent decision-making. However, his evasion of the 2020 election results and refusal to commit to maintaining press conference frequency left模糊 space around his "independence" pledge.
With several senators blocking the nomination, whether Warsh can officially take over before Powell's term ends on May 15 depends on the direction of the Justice Department's investigation, and Trump has made it clear he has no intention of backing down. Regardless of the final timeline, the policy direction represented by Warsh is already clear. A new Fed era, more inclined to pave the way for rate cuts with a productivity narrative and promote central bank slimming and institutional reform, is brewing. For the crypto market, the macro narrative framework for the next four years could see a significant shift.
