The market was surprised by the sudden news that President Donald Trump named Kevin Warsh as his choice for the next chairman of the Federal Reserve, ending a month-long saga of guessing games.
The US dollar rose, bitcoin fell, and the stock market became volatile when the news broke; While the market may have stabilized somewhat for now, uncertainty continues to plague traders across asset classes.
So who is Kevin Warsh and, more importantly, how will his leadership shape the future of monetary policy and cryptocurrencies?
Former Federal Reserve Governor
Kevin Maxwell Warsh is a former governor of the United States Federal Reserve who served from 2006 to 2011 and played a senior role during the 2008 global financial crisis, including as a key liaison between the Federal Reserve 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 spanning Wall Street and Washington.
After leaving the Federal Reserve, Warsh became a visiting fellow at Stanford University’s Hoover Institution, where he has written extensively on monetary policy, central bank credibility, and what he sees as the long-term risks of prolonged expansion of central bank balance sheets.
It’s worth noting here that while the nomination 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 Federal Reserve Board of Governors until January 31, 2028. Warsh still needs to be confirmed by the Senate before taking office, but a vacancy created by Governor Stephen Miran’s temporary term expiring on January 31, 2026 could allow him to join the board before May.
The vision of bitcoin
Warsh’s appointment has drawn particular scrutiny from digital asset investors, at least initially, given his long-held views on monetary discipline and skepticism toward bitcoin’s role as money.
While the concern is not with Warsh personally, his background has led many market participants to view him as potentially bearish for bitcoin and other risk assets. He is generally seen as favoring monetary discipline, higher real rates and a smaller Federal Reserve balance sheet, all of which flies in the face of a highly liquid environment that has historically supported risk assets.
So what are its ties to cryptocurrencies?
First, let’s take a look at what he said above about bitcoin.
In a public comment in 2015, Warsh approached bitcoin and cryptocurrencies primarily through a monetary policy lens, expressing skepticism about their use as stable mediums of exchange while acknowledging the potential of blockchain technology.
“The underlying technology in that whitepaper is just software,” Warsh said during a video conversation with Stanley Drukenmiller. “It’s just the newest, coolest software that will give us the opportunity to do things we could never have done before.”
While acknowledging that all software can be used for good and evil, Warsh said building it here in the U.S. 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 bit of condescension in your voice, that people are buying bitcoins.”
He went on to defend bitcoin, saying that “it could provide market discipline, it could tell the world that things need to be fixed.” He also said that he thinks of “bitcoin like many things, but certainly with each passing day it is gaining new life as an alternative currency.”
While the interview is from 2015, when bitcoin was still considered dangerous and used primarily for illegal activities, a lot has changed in the last eleven years. Now, the United States has a pro-crypto government, legislation is being prepared to create a legal framework for digital assets, and most importantly, cryptocurrencies have become too big to ignore, even for Wall Street giants.
The potential future Federal Reserve chair has argued that central banks must commit to digital money, including possibly considering a US central bank digital currency (CBDC) to counter bitcoin and rival China’s digital yuan. It is worth noting that CBDC is a highly debated topic in the crypto community due to privacy concerns.
He also said that cryptocurrencies were nothing more than “software masquerading as money.” He categorized cryptocurrencies as a symptom of “speculative excess” driven by loose monetary policy and argued that Bitcoin’s rise was largely a by-product of the “global dollar flood” and that as liquidity dwindles, such assets are likely to lose their appeal.
‘Not hostile to cryptocurrencies’
Warsh also had close ties to cryptocurrencies in general.
Warsh has attracted 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 cryptocurrency, blockchain, and fintech.
Market analysts covering cryptocurrencies have said Warsh’s political outlook, which emphasizes institutional credibility and monetary discipline, could be important for liquidity conditions affecting risk assets like bitcoin.
Warsh is no crypto evangelist, but he has expressed a pragmatic and nuanced stance on innovation and regulation. Analysts see him as cautious about the volatility of private cryptocurrencies and more focused on systemic financial stability than defending unregulated markets.
While criticizing its use as money, Warsh has admitted that bitcoin could serve as a “sustainable store of value, like gold.” However, he maintains that his boom and bust cycles are speculative and may predict “increased market volatility” in broader financial assets.
“Warsh is not seen as hostile to cryptocurrencies, and the prospect of a new Fed chair being perceived as more inclined to rate cuts could trigger a near-term relief rally across risk assets,” said market analyst and Adlunam founder Jason Fernandes.
“However, without a genuine macroeconomic justification for easing, any such measure will be met with skepticism and accepted,” Fernandes added.
