The US Department of Justice's decision to drop its investigation into Federal Reserve Chair Jerome Powell has brought President Donald Trump's economic agenda one step closer to fruition. With the DOJ no longer pursuing the matter, Trump's nominee to replace Powell, Kevin Warsh, may now have a clearer path to confirmation. Warsh, who has significant personal wealth, including investments in cryptocurrency, has been awaiting a final Senate vote after appearing in a confirmation hearing.
Trump has been critical of Powell's handling of interest rates, and the nomination of Warsh is seen as an attempt to shift the Fed's monetary policy. The dropped investigation, which was related to cost overruns in a Fed building project, was transferred to the Fed's inspector general. This move has increased the likelihood of Warsh's confirmation, with prediction markets now giving him over 80% odds of being confirmed by May 15.
The development has significant implications for the crypto industry, as a Trump-appointed Fed chair could influence the implementation of rules governing stablecoin issuers and other financial policies. The Senate, which has a Republican majority, may now be able to move more quickly towards confirming Warsh, who has stated that he would act independently of the White House. However, not everyone is convinced, with Senator Elizabeth Warren dismissing the move as an attempt to install a Trump ally at the Fed, and noting that the administration is still pursuing a separate investigation into Fed Governor Lisa Cook.