The US Department of Justice, led by President Donald Trump, has halted its investigation into Federal Reserve Chair Jerome Powell, which could pave the way for Trump's nominee, Kevin Warsh, to take over as Fed chair. Warsh, who has significant personal wealth, including cryptocurrency assets, has been awaiting a final Senate vote after a confirmation hearing. Trump, who has criticized Powell for high US interest rates, chose Warsh to address this issue, but Republican Senator Thom Tillis had vowed to block the confirmation as long as the DOJ pursued the investigation into Powell over a Fed building project's cost overruns.
The investigation was dropped, and the DOJ has asked the Fed's inspector general to look into the matter. This development has increased the likelihood of Warsh's confirmation, with some prediction markets showing odds above 80%. The move could give Trump greater influence over US monetary policy and provide him with more allies on the Fed board, which makes decisions on financial policy, including regulations for the crypto industry.
Senator Elizabeth Warren has dismissed the move, calling it an attempt to install Warsh as Fed chair, while Senator Tillis has expressed support for Warsh, saying he would vote yes on his nomination once the DOJ dropped its investigation into Powell.