Kevin Warsh, the nominee to lead the Federal Reserve, has filed a 69-page financial disclosure form, revealing a complex web of investments, including stakes in over a dozen blockchain and digital asset companies. His portfolio spans DeFi lending, decentralized derivatives, Layer 1 and Layer 2 networks, prediction markets, and Bitcoin payments infrastructure. Warsh has pledged to divest most of these holdings, which were previously undisclosed. The discovery of these investments has sparked concerns about potential conflicts of interest, given Warsh's future role in overseeing stablecoin regulation, bank crypto custody policy, and central bank digital currency decisions.
The majority of Warsh's crypto holdings are held through venture fund structures, including DCM Investments 10 LLC and a series of funds labeled AVF I, AVF II, AVF III, and AVGF I and II. While the size of these holdings is unclear, they are reported to be worth less than $1,000 each. Warsh has also invested in Bitwise Asset Management, the firm behind a spot bitcoin ETF. The divestiture of these assets will be required to comply with the Ethics in Government Act.
However, the process of selling these stakes, particularly those in illiquid venture funds, may be complex. Even after divestiture, Warsh will face a complicated recusal landscape, with federal ethics rules requiring a one-year cooling-off period for matters directly affecting recent financial interests. This could impact his ability to participate in regulatory decisions related to the crypto industry. Warsh's broader financial profile reveals significant earnings from consulting fees and speaking engagements with firms involved in digital asset trading operations.
His combined assets with his wife are estimated to be at least $192 million, making him one of the wealthiest Fed chairs in modern history. The Senate Banking Committee is expected to hold a confirmation hearing for Warsh next week, where his crypto holdings are likely to be a topic of discussion.
The crypto industry views Warsh's disclosure as a double-edged signal, potentially indicating a more nuanced understanding of the technology, but also raising concerns about his ability to act on these views due to recusal obligations.