The US Department of Justice, under President Donald Trump, has withdrawn its investigation into Federal Reserve Chair Jerome Powell, potentially paving the way for Trump's nominee, Kevin Warsh, to take over as Fed chair. Warsh, who has significant personal wealth, including assets in the cryptocurrency space, has been awaiting a Senate vote after a recent confirmation hearing.
Trump has been critical of Powell's handling of interest rates and had chosen Warsh as his replacement. However, Republican Senator Thom Tillis had threatened to block Warsh's confirmation as long as the DOJ investigation into Powell continued. The investigation, which was related to cost overruns in a Fed building project, has been dropped, and the Fed's inspector general will now look into the matter.
Following the news, betting odds on Warsh's confirmation before May 15 surged from 30% to over 80%. US Attorney for the District of Columbia Jeanine Pirro stated that she would not hesitate to restart the investigation if warranted. The move could give Trump greater influence over US monetary policy and leave him with more allies on the Fed board, which makes decisions on financial policy, including regulations for the crypto industry.
Senator Elizabeth Warren criticized the move, calling it an attempt to clear the path for Warsh's confirmation, while Senator Thom Tillis expressed his support for Warsh, saying he would vote yes on his nomination now that the DOJ has dropped its investigation into Powell.