U.S. President Trump is expected to select a new Federal Reserve Chair before Christmas, with the most promising candidate being Kevin Hassett, which could bring positive news for the crypto industry.
Hassett is a White House economic advisor and has reportedly become a strong contender for the position of Federal Reserve Chair. He currently serves as the Director of the National Economic Council and oversaw the White House-led digital assets working group earlier this year.
Trump has been trying to strengthen his administration's control over the Federal Reserve, which serves as the nation's central bank, thereby expanding the White House's influence over monetary policy.
The nomination process has not yet begun, but observers are already speculating about the potential changes to U.S. monetary policy and crypto under Hassett's leadership.
Hassett served as an assistant professor of economics at Columbia Business School in the 1990s. During that time, he also worked as an economist in the Research and Statistics Division of the Federal Reserve Board. He has also served as a policy advisor at the Treasury Department under former Presidents George H.W. Bush and Bill Clinton.
Hassett briefly served as a member of the White House Council of Economic Advisers during Trump's first term. In the president's second term, Hassett became the Director of the National Economic Council (NEC), which is part of the executive branch used by the president to formulate domestic and international economic policy.
Despite a lack of clear public statements, Hassett is widely viewed as pro-crypto. In June, he disclosed a holding of at least $1 million in Coinbase and stated that he received at least $50,001 in compensation due to his role on the academic and regulatory advisory board of the exchange.
The National Economic Council, which he directs, led the White House digital assets working group earlier this year and released documents outlining the government's crypto policy.
The Federal Reserve does not regulate securities or commodities, so its policy changes cannot directly influence crypto regulation. However, a crypto-friendly Federal Reserve could still positively impact the industry in various ways.
First, lower interest rates typically mean better crypto prices. Bitwise Senior Investment Strategist Juan Leon stated that the impact on the market is "strongly bullish." He described Hassett as a "radical 'dove'" who openly criticizes the current high interest rates and advocates for deeper and faster rate cuts.
Zach Pandl, the research director at the digital asset investment platform Grayscale, said, "Marginally, Hassett should be viewed as a positive factor for crypto => supports rate cuts, served as an advisor to Coinbase, and was NEC director during the push for crypto policy at the White House."
The Federal Reserve also regulates banks, primarily including bank holding companies, payment system access, reserve requirements, and liquidity and risk rules. Tightening or loosening these rules can affect various service access for crypto companies, including:
- Crypto custody
- Loans collateralized by cryptocurrencies
- Access to payment channels
- Regulatory requirements for stablecoin issuers
- Settlement rules
Nevertheless, the White House has not made a clear nomination. Treasury Secretary Scott Bessent announced in late October that Hassett is on a five-person shortlist to replace Powell. Others on the list include former Federal Reserve Governor Kevin Warsh, current Federal Reserve Governor Christopher Waller, Michelle Bowman, and BlackRock executive Rick Rieder. A nomination is expected before Christmas.
Trump has been trying to exert more control over the Federal Reserve to have a greater influence on his preferred monetary policy.
Earlier this year, he attempted to replace Federal Reserve Governor Lisa Cook. Cook refused to resign, and the case was submitted to the Supreme Court, which currently allows her to remain in office.
In a court document, Cook's attorney Abbe Lowell described this move as a "full-scale attack on the independence of the Federal Reserve System, which has a century-long history."
The Council on Foreign Relations praised the independence of this system, stating that it "protects the Federal Reserve from improper political influence, such as pressure from the White House to cut rates before an election, which may yield short-term political gains but can cause long-term economic harm."
An independent Federal Reserve also "enhances the credibility of the Federal Reserve," increasing market confidence in its decisions. "Crucially, this also allows the Federal Reserve to take difficult but necessary actions even when its decisions are unpopular."
Bloomberg columnist and senior markets editor John Authers wrote that choosing Hassett "seems to be about loyalty."
George Pollack, a senior policy analyst at Signum Global Advisors, reportedly stated that Trump is nominating Hassett "because he believes Hassett is the candidate most likely to support the government's priorities."
If the Federal Reserve becomes another extension of the government, this outcome may be beneficial for the crypto market in the short term, but could be disastrous in other respects. Interest rates below the necessary level may garner cheap political capital but could lead to rising inflation.
The Center for American Progress explains: "Knowing that interest rates will be based on well-researched data rather than political whims can assure the world that the U.S. economy will remain relatively stable and its markets will remain rational."
Related: How the SEC's 2025 revision plan will simplify cryptocurrency regulation
Original article: “Who is Kevin Hassett? Trump’s ‘pro-crypto’ favorite for Federal Reserve Chair”
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