US President Donald Trump is slated to choose a new Federal Reserve chair by Christmas, and the frontrunner, Kevin Hassett, could be a boon for the crypto industry.
Hassett is a White House economic adviser who has reportedly emerged as a strong candidate for the Fed chair position. He is the director of the National Economic Council and oversaw the digital asset working group directed by the White House earlier this year.
Trump has been trying to increase his administration’s control over the Federal Reserve, the country’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 what a Hassett chairmanship could mean for US monetary policy and crypto.
Fed frontrunner Kevin Hassett has supported crypto in the past
Hassett was an assistant professor of economics at the Columbia Business School in the 1990s. While there, he also served as an economist in the Division of Research and Statistics at the Federal Reserve Board of Governors. He was also a policy consultant with the Department of the Treasury under the administrations of former presidents George H.W. Bush and Bill Clinton.
Hassett briefly sat on the White House Council of Economic Advisors during the first Trump administration. During the president’s second term, Hassett served as director of the National Economic Council (NEC), a part of the executive branch that the president uses for setting domestic and international economic policy.
Despite a lack of clear public statements, Hassett is widely regarded as pro-crypto. In June, he revealed a stake of at least $1 million in Coinbase and that he was compensated at least $50,001 for his role on the exchange’s Academic and Regulatory Advisory Council.
The NEC, where he serves as director, oversaw the development of the White House’s digital asset working group, which published a paper earlier this year outlining the administration’s policy on crypto.
The Fed doesn’t oversee securities or commodities, so its policy changes can’t affect crypto regulation. But a crypto-friendly Fed could still have a positive impact on the industry in several ways.
Related: Bitcoiners perk up as odds of a December Fed rate cut almost double
Firstly, lower interest rates generally mean better crypto prices. Juan Leon, a senior investment strategist at Bitwise, said that the implications for markets are “strongly bullish.” He called Hassett an “aggressive ‘dove’ who has publicly criticized current rates for being too high and advocated for deeper, faster cuts.”
Zach Pandl, head of research at digital asset investment platform Grayscale, said, “On the margin Hassett should be considered positive for crypto => supports rate cuts, past Coinbase advisor, NEC director during White House crypto policy push.”
The Fed also regulates banks, namely bank holding companies, payment system access, reserve requirements and liquidity and risk rules. Tightening or loosening these rules could affect crypto companies’ access to a number of services, including:
Still, the White House has yet to make a clear nomination. Treasury Secretary Scott Bessent announced in late October that Hassett was on a short list of five nominees to replace Jerome Powell. These included former Fed Governor Kevin Warsh, current Fed Governors Christopher Waller and Michelle Bowman, and BlackRock executive Rick Rieder. A nomination is expected by Christmas.
Trump administration threatens an independent Fed
Trump has been attempting to assert more control over the Federal Reserve as a means to exert greater influence over his preferred monetary policies.
Earlier this year, he attempted to fire Federal Reserve Governor Lisa Cook. Her refusal to step down sent the case to the Supreme Court, which, for the time being, has allowed her to stay on.
In a court filing, Cook’s lawyer, Abbe Lowell, called the attempt a “broadside attack on the century-old independence of the Federal Reserve System.”
The Council of Foreign Relations has lauded the independence of this system, stating that it “shields the Federal Reserve from undue political influence, such as pressure from the White House to lower interest rates ahead of an election, which could offer short-term political gains but cause long-term economic harm.”
An independent Fed also “enhances the Fed’s credibility” and makes the market more confident in its decisions. “Crucially, it also empowers the Federal Reserve to take difficult but necessary actions, even when they are unpopular.”
John Authers, a senior editor for markets and Bloomberg Opinion columnist, wrote that choosing Hassett “appears to be about loyalty.”
“Trump regards nominating Jerome Powell eight years ago as a big mistake. Waller, Warsh and Rieder all in different ways might establish themselves as independent from the administration.”
George Pollack, a senior US policy analyst at Signum Global Advisors, reportedly said that Trump will nominate Hassett “because of his confidence that Hassett will be the candidate most likely to support the administration’s priorities.”
Were the Fed to become another arm of the administration, the results could be good for crypto markets in the short term but disastrous elsewhere. Lower-than-needed interest rates could score cheap political points but lead to increased inflation.
The Center for American Progress explained, “Knowing that the rates will be based on well-researched data, and not political whims, assures the world that the U.S. economy will remain relatively stable and its markets will remain rational.”
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