President Donald Trump announced he will nominate former Federal Reserve Governor Kevin Warsh to lead the US central bank.
In a Jan. 30 post on Truth Social, the president confirmed the selection, writing:
“I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best. On top of everything else, he is ‘central casting,’ and he will never let you down.”
Trump’s move follows months of internal jockeying over who would replace Chair Jerome Powell when his term ends in May. Warsh, 55, served on the Fed’s board from 2006 to 2011 and later worked in economic policy, finance, and academia.
His return to the central bank is viewed by industry players as a shift toward a leader more willing than Powell to shrink the Fed’s balance sheet and rein in liquidity. This outcome typically pressures speculative assets, even if the policy-rate path eventually turns more dovish.
Meanwhile, the nomination lands as investors are already trying to price a leadership change into the 2026 rate path. The Fed held rates steady this week, pausing its easing cycle, and interest-rate futures have pointed to June as the next likely cut, which would occur under the next chair.
A rate-cut nominee with a balance-sheet plan
Trump has repeatedly criticized Powell for not lowering rates faster, and he has signaled he wants a chair aligned with pushing down borrowing costs.
This message resonates with households facing higher mortgage rates and with a White House focused on growth and federal financing costs.
Warsh, however, is not being interpreted as a simple “rates down” pick.
While his current stance on interest rates is that they should be lower and he has argued that AI-driven innovation can help contain inflationary pressures, his history at the Fed matters for how markets handicap the risk of swift easing.
At the time, 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 has shown up most clearly in the dollar reaction. Robin Brooks, a senior fellow at the Brookings Institution, wrote that Warsh is a “really good pick” for Fed chair and is known as a hawk.
However, Brooks said the market is asking what Warsh promised to get the nod, which is why the dollar (after a sharp decline in recent days) is not rallying despite news that should normally support its uptrend.
Meanwhile, some macro commentary pushed the “two levers” thesis even further.
Financial analysis platform MacroMicro summarized the prospective shift as “Shrink the Fed, Ease the Rate,” framing it as a hawkish-dove paradox.
This approach entails aggressive balance-sheet reduction in exchange for modest rate cuts and marks a broader shift away from demand management toward a supply-side growth model.
Warsh’s crypto posture: software first, dollar first
Warsh has not consistently pitched himself as a crypto booster, and his public writing often separates blockchain infrastructure from the idea of private tokens functioning as money.
In a 2022 Wall Street Journal op-ed, Warsh argued that “cryptocurrency” is a misnomer and framed it primarily as software. At the same time, he urged the US to pursue a stronger “digital dollar” approach tied to privacy and dollar competitiveness.
According to him:
“The US should announce the essential design features of a digital dollar to be used exclusively for wholesale transactions. The existing wholesale payment system is slow, cumbersome, opaque, and expensive. The new regime would more effectively intermediate payments among the government, financial firms, and foreign central banks. Settlements would be made faster. Payments would be cheaper. Cross-border transfers would be seamless. Money creation would be more transparent.”
For Bitcoin, that framing cuts both ways. On the one hand, a Fed chair who treats crypto primarily as technology could be more comfortable modernizing payments plumbing and clarifying how regulated institutions interact with tokenized rails, developments that often benefit stablecoins, custody, and on-chain settlement.
On the other hand, his dollar-first lens and tacit support for a wholesale central bank digital currency (CBDC) in the guise of a digital dollar are less aligned with the “Bitcoin as alternative money” storyline.
Still, crypto industry figures such as Bitwise’s CEO, Hunter Horsley, have portrayed Warsh as a critical supporter of the industry.
They describe him as pro-crypto and cited his advisory roles, arguing that he understands Bitcoin’s macro narrative, has invested in crypto, fintech, and AI companies, and brings a policymaker’s understanding of how liquidity and regulation intersect.
Notably, Warsh’s remarks on the emerging industry further complicate that posture.
In a widely circulated video on X, Warsh pushed back against what he described as condescension toward Bitcoin buyers, said Bitcoin “does not make me nervous,” and suggested it could provide “market discipline” by signaling that macroeconomic problems need to be fixed.
In the same remarks, he described the Bitcoin white paper’s underlying technology as software and said building the technology in the US could improve productivity over the next decade, before adding that Bitcoin was gaining new life as an alternative currency.
A confirmation fight that doubles as a Fed-independence test
Warsh’s nomination faces hurdles, as it requires Senate confirmation, and Democratic lawmakers argue that the move is part of a broader effort by Trump to exert more control over one of the few remaining independent federal institutions.
Senator Thom Tillis described Warsh as a qualified nominee with deep expertise in monetary policy, but he vowed to oppose the confirmation.
Tillis stated he would block any nominee to the Federal Reserve until the Department of Justice concludes its investigation into Powell, arguing that the probe threatens the central bank’s independence and constitutes 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 construe as possessing criminal intent. Protecting the independence of the Federal Reserve from political interference or legal intimidation is non-negotiable.”
However, Warsh’s supporters argue that his profile could strengthen the institution rather than weaken it.
Mohamed A. El-Erian, the Rene M. Kern Professor of Practice at Wharton, noted that Warsh brings a strong mix of deep expertise, broad experience, and sharp communication skills that could reform and modernize the Fed.
According to El-Erian, this bodes well for enhancing policy effectiveness and protecting the institution’s political independence.
Meanwhile, some skeptics have also pointed out that Warsh’s nomination could produce friction with Trump’s push for rapid easing.
Renaissance Macro Research said in a post on X that Warsh has been a monetary policy hawk for most of his career, including during a period when labor markets were under severe strain, and suggested his dovishness today stems from convenience.
The firm wrote:
“The President risks getting duped.”
For Bitcoin, the key tells are likely to be mundane, not crypto-specific. Traders will listen to Warsh’s discussion of the balance sheet, the desired level of reserves, and the sequencing of rate cuts and quantitative tightening.
Those details determine whether a chair who argues rates should be lower also delivers easier financial conditions overall, or a different mix of levers that still constrains liquidity.