Kevin Warsh, nominated to lead the Federal Reserve, has filed a 69-page financial disclosure form, revealing a complex web of investments, including those in cryptocurrency and blockchain technology. The disclosure, required by the U.S. Office of Government Ethics, shows Warsh and his wife have combined assets of at least $192 million, with a notable portion invested in over a dozen digital asset and blockchain companies. These investments span multiple sectors, including DeFi lending, decentralized derivatives, Layer 1 and Layer 2 networks, prediction markets, and Bitcoin payments infrastructure.
Warsh has committed to divesting the majority of these holdings to avoid conflicts of interest. The investments are primarily held through two fund structures: DCM Investments 10 LLC and a series of funds labeled AVF. The specific crypto and blockchain positions include investments in DeFi and trading protocols, Layer 1 and Layer 2 networks, Bitcoin-specific companies, and crypto investment and financial infrastructure. Warsh previously invested in Bitwise Asset Management, the firm behind a spot bitcoin ETF, although this position is not included in the current disclosure.
Most of the crypto positions are small venture bets, with individual line items reported without dollar values, indicating they are worth less than $1,000. However, Warsh holds over $100 million in the Juggernaut Fund LP and dozens of positions in THSDFS LLC, which will require full divestiture due to their size and potential for conflict.
The divestiture process may be complicated, particularly for illiquid venture stakes. Even after selling these holdings, Warsh will face a complex recusal landscape, with federal ethics rules requiring a one-year cooling-off period for matters directly affecting recent financial interests.
This could impact the Fed's decisions on various issues, including stablecoin regulation and central bank digital currency. Warsh's deliberate pursuit of exposure to specific protocols, networks, and infrastructure companies is notable, given the Fed's regulatory and monetary policy decisions will directly affect these areas. His broader financial profile, including significant consulting fees from prominent macro investors and asset management firms, underscores his connections to the financial industry. The Senate Banking Committee is expected to hold a confirmation hearing for Warsh, where his crypto holdings and potential conflicts of interest will likely be scrutinized.
The crypto industry may view Warsh's disclosure as a double-edged signal, potentially indicating a more nuanced understanding of the technology, but also highlighting the constraints of mandatory divestiture and recusal obligations.