Author: Bernard, ChainCatcher
Powell's "Countdown," Trump Prepares Early
In May 2026, Federal Reserve Chairman Powell's term will officially end. However, the Trump administration's preparations have already begun—Trump and Treasury Secretary Bessent are attempting to gain substantial control over monetary policy by mastering key voting rights on the Federal Reserve Board (FRB) before the first half of 2026. Currently, Trump's camp has secured three seats by having Stephen Miran replace Adriana Kugler, and board member Lisa Cook is under pressure to resign due to allegations of mortgage fraud, leaving them just one seat short of a majority on the seven-member board.
From the proposal of the "shadow chairman" concept to the quiet arrangement of board seats, this game surrounding control of the Federal Reserve is reshaping the future landscape of cryptocurrency. According to the two major prediction platforms, Polymarket and Kalshi, several candidates with an open attitude towards cryptocurrency are competing for this key position, and the market's expectations for the next Federal Reserve chairman have shown significant divergence: Kevin Hassett, Kevin Warsh, and Christopher Waller have emerged as the top three candidates, with odds significantly ahead; other candidates like Bowman and Bessent have odds of ≤1%; notably, Musk also appears on Polymarket's odds list, currently ranked last.
Three Major Candidates Emerge
On September 5, Trump confirmed in an interview in the Oval Office that Kevin Hassett (Director of the White House National Economic Council), Kevin Warsh (former Federal Reserve governor), and Christopher Waller (current Federal Reserve governor) are his "top three" final candidates to replace Powell.
1. Kevin Hassett: Leading the Prediction Market
In the prediction market, current White House National Economic Council Director Kevin Hassett leads with a 29% probability on Kalshi and 8% on Polymarket. This 63-year-old economist holds a significant position in Trump's camp. He served as the Chairman of the Council of Economic Advisers from 2017 to 2019 and was one of the main architects of the Tax Cuts and Jobs Act during Trump's first term, providing economic policy advice to Trump during the 2024 presidential campaign.
Regarding his stance on cryptocurrency, according to financial disclosure documents submitted in June this year, Hassett holds between $1 million and $5 million in Coinbase stock, which he received as compensation for his advisory role at Coinbase. His total assets amount to at least $7.6 million, including speaking fees from institutions like Goldman Sachs and Citigroup.
In terms of monetary policy, Hassett is a typical dove. He has publicly criticized Powell's decision to maintain high interest rates multiple times, arguing that the Federal Reserve should be more aggressive in cutting rates to support economic growth. Trump has repeatedly praised Hassett on CNBC's "Squawk Box" this August, viewing the "Kevins" (Hassett and Warsh) as priority candidates for the Federal Reserve chairmanship.
2. Kevin Warsh: "Estee Lauder's Son-in-Law"
Kevin Warsh ranks second with a 19% probability on Kalshi and 13% on Polymarket, and his background represents a perfect blend of Wall Street and Washington. In 2006, at just 35 years old, Warsh was appointed by then-President Bush as a Federal Reserve governor, becoming the youngest governor in the history of the Federal Reserve. During the 2008 financial crisis, he played a key role as a liaison between the Federal Reserve and Wall Street, coordinating the sale of Bear Stearns to JPMorgan Chase and participating in the decision-making process for Lehman Brothers' collapse.
Warsh's personal background is equally noteworthy. His wife, Jane Lauder, is the heir to the Estee Lauder cosmetics empire, with a net worth exceeding $2 billion. His father-in-law, Ronald Lauder, is not only a longtime friend and former benefactor of Trump but also the person who first proposed the idea of the U.S. purchasing Greenland during Trump's first term, giving Warsh a unique influence in Washington due to his deep political and business connections.
In terms of cryptocurrency, Warsh has shown a pragmatic yet cautious stance. He has previously invested as an angel investor in the algorithmic stablecoin project Basis and the cryptocurrency index fund management company Bitwise. In a 2021 interview with CNBC, Warsh stated, "In the current environment of significant shifts in monetary policy, it makes sense for Bitcoin to be part of a portfolio; it is gaining new life as an alternative currency. If you are under 40, Bitcoin is your new gold." He also mentioned that part of Bitcoin's rise is due to a "bid shift" from gold, pointing out that Bitcoin's price volatility severely undermines its role as a reliable unit of account or effective means of payment. Additionally, in a 2022 op-ed in The Wall Street Journal, Warsh supported the U.S. issuing a central bank digital currency (CBDC) to counter China's digital yuan, a position that drew criticism from the crypto community for potentially threatening decentralization.
3. Christopher Waller: A Strong Supporter of Stablecoins
Current Federal Reserve governor Christopher Waller ranks third with a 17% probability on Kalshi and 14% on Polymarket, and he may be the most pro-cryptocurrency current Federal Reserve official. Waller has served as a Federal Reserve governor since 2020 and previously was the research director at the St. Louis Fed, being an authority in the field of monetary economics.
Waller's support for stablecoins is particularly noteworthy. In August this year, at a blockchain seminar in Wyoming, he referred to the transformation of payment systems as a "technology-driven revolution" and explicitly stated that "stablecoins have the potential to maintain and expand the international role of the dollar." He believes that stablecoins, with their 24/7 availability, near-instant settlement speed, and unrestricted liquidity, have become particularly useful financial tools, especially in inflationary economies or areas with limited banking services.
Waller argues that stablecoins actually strengthen rather than weaken the global position of the dollar. In a speech at the "A Very Stable Conference" in February this year, he likened stablecoins to "synthetic dollars," complementing Bitcoin's "digital gold." He also praised the recently passed GENIUS Act, viewing it as an important milestone in U.S. digital asset regulation, laying the groundwork for the responsible expansion of stablecoins. Waller insists that innovation should primarily come from the private sector and opposes the Federal Reserve issuing a CBDC.
Other Potential Candidates
4. Michelle Bowman: An Internal Reformer on the Rise
Although she has only a 1% probability in the prediction market, current Federal Reserve Vice Chair for Bank Supervision Michelle Bowman should not be overlooked. Nominated directly to the Federal Reserve by Trump in 2018, she was promoted to Vice Chair responsible for bank supervision in May this year, holding key influence in formulating stablecoin regulations.
Bowman has shown an open attitude towards cryptocurrency. In a speech this August, she advocated that banks should support the wave of digital assets and that the Federal Reserve should provide rules that do not hinder the industry's development. She emphasized that "regulators must recognize the unique characteristics of these new assets and distinguish them from traditional financial instruments or banking products." She even suggested that Federal Reserve employees should be allowed to hold a small amount of crypto assets to "achieve a working understanding of the underlying functions."
Bowman believes that tokenization can facilitate faster ownership transfers, reduce costs, and mitigate "well-known risks," asserting that stablecoins "will become fixtures in the financial system." She criticized the "overly cautious mindset," advocating for a "pragmatic, transparent, and tailored" regulatory framework. At the FOMC meeting in September 2024, she voted against a significant 50 basis point rate cut, supporting a more moderate 25 basis point cut, a stance that earned her Trump's appreciation.
5. Scott Bessent: Current Treasury Secretary, Bessent clearly stated in a speech this July that "cryptocurrency is not a threat to the dollar; stablecoins can actually strengthen dollar hegemony." While he explicitly stated he would not use Treasury funds to purchase Bitcoin, he supports using government-seized crypto assets to establish reserves, currently valued at approximately $15-20 billion.
6. Judy Shelton: An economist, Shelton's views may be the most disruptive. As a staunch advocate of the gold standard, Shelton has long criticized the Federal Reserve's excessive power, even comparing it to the Soviet central planning system, arguing that the Fed's 2% inflation target is a form of indirect theft of public wealth. Shelton sees a connection between the gold standard concept and cryptocurrency, having stated, "I like the idea of a gold-backed currency, which could even be realized through cryptocurrency."
7. Roger W. Ferguson Jr.: Former Vice Chairman of the Federal Reserve, representing the voice of the traditional financial establishment. Ferguson led the Federal Reserve's initial response during the 9/11 attacks, ensuring the normal operation of the U.S. financial system. Ferguson has not publicly stated a clear position on cryptocurrency but emphasizes the importance of maintaining the Federal Reserve's independence and warns that political interference could undermine the U.S. economic leadership.
8. Arthur Laffer: The father of supply-side economics, the famous creator of the "Laffer Curve," and one of the architects of Reaganomics, Laffer views Bitcoin as "private rules-based money," similar to the gold standard, which can promote global monetary progress and aligns with supply-side principles (reducing government intervention and promoting growth).
9. Larry Kudlow: Former Director of the White House National Economic Council, Kudlow's attitude towards cryptocurrency is relatively cautious but gradually becoming more open. In 2019, he was viewed by the crypto community as "the best argument for why we need Bitcoin" due to his criticism of it. However, by 2022, he began warning on Fox Business that "radical progressives will try to regulate digital currency," opposing excessive regulation of cryptocurrency.
10. Ron Paul: Former Texas Congressman, highly respected in libertarian and Bitcoin communities. Paul has gradually become a staunch supporter of Bitcoin, starting from a critical stance towards the Federal Reserve. He claims that the only way to avoid recessions caused by the Federal Reserve is to allow people to use alternative currencies like Bitcoin and to exempt cryptocurrency from capital gains tax.
11. Chamath Palihapitiya: Billionaire, venture capitalist, and one of Silicon Valley's most influential Bitcoin advocates. Palihapitiya once held a significant amount of Bitcoin, and although he later regretted selling Bitcoin worth $3-4 billion, he remains a staunch supporter of cryptocurrency. He proposed that the government could use its Bitcoin holdings to launch a U.S. sovereign wealth fund, raising $50-100 billion through borrowing rather than selling Bitcoin.
12. Howard Lutnick: Current Secretary of Commerce and CEO of Cantor Fitzgerald. Lutnick's company is a major custodian for Tether (the issuer of USDT), holding tens of billions of dollars in U.S. Treasury bonds to support USDT. His son, Brandon Lutnick, has also collaborated with SoftBank, Tether, and Bitfinex this year to establish a $3 billion Bitcoin investment fund.
Although these candidates have low odds of winning in the prediction market, their differing attitudes towards cryptocurrency reflect the diversity of U.S. policymakers' understanding of digital assets. From Bessent's vision of a "crypto superpower" to Paul's idea of monetary freedom, from Lutnick's business practices to Laffer's economic theories, each perspective provides unique insights into the potential future direction of the Federal Reserve's cryptocurrency policies. Personnel changes, policy loosening, and softened attitudes indicate that the Federal Reserve, which once made the crypto market "walk on thin ice," is re-engaging in dialogue with the industry.
Market Expectations: Is a Flood of Liquidity Coming?
Mike Novogratz, CEO of Galaxy Digital, clearly stated in an interview with Kyle Chasse: "The next Federal Reserve chair could be the biggest catalyst for a Bitcoin and overall cryptocurrency bull market." Novogratz predicts that if Trump appoints an "extremely dovish" Federal Reserve chair who significantly cuts rates when it shouldn't, Bitcoin's price could reach $200,000. Meanwhile, BitMEX founder Arthur Hayes, in his latest article "Four, Seven," even predicted a "sky-high" Bitcoin price of $3.4 million—if the Trump administration implements yield curve control (YCC) through control of the Federal Reserve, it could create up to $15.2 trillion in credit. Based on the historical correlation of "for every $1 of credit created, Bitcoin rises by $0.19," Bitcoin could reach $3.4 million.
However, Novogratz also warned that this scenario would be "really bad for America," believing that while such radical monetary policy would benefit cryptocurrency, the cost would be the loss of Federal Reserve independence and severe damage to the U.S. economy. Hayes also believes the Federal Reserve will be forced to massively purchase long-term Treasury bonds to suppress interest rates, allowing regional banks more lending space to support small and medium-sized enterprises, with liquidity injections far exceeding those during the 2020 pandemic. This "poor people's quantitative easing 4.0" policy would shift credit creation from Wall Street to Main Street's small and medium banks.
Conclusion: Waiting for the Other Shoe to Drop
As Novogratz said, "The political situation" makes predicting the peak of the Bitcoin cycle unprecedentedly difficult. Changes in Federal Reserve personnel are never just a bureaucratic procedure; they are catalysts for reshaping the entire crypto landscape. From the SEC's softened stance to the FDIC relaxing restrictions, from the approval of Bitcoin ETFs to the advancement of stablecoin legislation, every loosening of the regulatory environment is paving the way for this impending monumental shift in monetary policy.
Polymarket data shows a 44% probability that Trump will not announce the next Federal Reserve chair by the end of the year, meaning the market may have to wait several months to see the direction. However, based on the backgrounds of the current leading candidates, regardless of who ultimately takes over, they generally exhibit a more open attitude towards financial innovation. This shift is not coincidental; an irreversible trend has formed: when BlackRock manages the largest Bitcoin ETF, Federal Reserve governors openly support stablecoins, and the Treasury Secretary states that "cryptocurrency is not a threat to the dollar"—the highest halls of traditional finance have opened their doors to digital assets, and a more crypto-friendly regulatory era may be on the horizon. For the crypto industry, whoever ultimately takes over will need to be prepared for the potential arrival of a "flood of liquidity era."
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