The US Department of Justice, under President Donald Trump, has dropped its investigation into Federal Reserve Chair Jerome Powell, which could facilitate the confirmation of Trump's nominee, Kevin Warsh, as Powell's replacement. Warsh, who has significant personal wealth, including assets in the cryptocurrency space, is awaiting a final Senate vote after a recent confirmation hearing.
Trump has been critical of Powell's management of interest rates and has chosen Warsh to address this issue. However, Republican Senator Thom Tillis had previously stated that he would block Warsh's confirmation as long as the DOJ investigation into Powell continued, particularly regarding cost overruns in a Federal Reserve building project. The investigation's closure has now shifted the odds in favor of Warsh's confirmation, with prediction markets indicating an increased likelihood of his confirmation before May 15.
US Attorney for the District of Columbia Jeanine Pirro stated that the DOJ has requested the Federal Reserve's inspector general to investigate the matter and issue a report. This development could grant Trump greater influence over US monetary policy, as having his nominee at the helm of the Federal Reserve would provide him with more allies on the Fed board, which makes decisions on financial policy, including regulations for the cryptocurrency industry.
Senator Elizabeth Warren criticized the move, arguing that it is an attempt to pave the way for Warsh's confirmation, while also noting that the administration is still pursuing a case against Fed Governor Lisa Cook. Senator Tillis expressed his support for Warsh, stating that he would vote in favor of his confirmation once the DOJ dropped its investigation into Powell.