DOJ Drops Probe, Clearing Path for Trump's Crypto-Friendly Fed Chair Nominee
The DOJ closed its investigation into Fed Chair Powell, unblocking Senator Tillis's hold and boosting Kevin Warsh's confirmation odds. Warsh, who holds crypto assets, could steer Fed policy favorably for the industry. Prediction markets now see a swift confirmation.
Quick Take
DOJ drops criminal probe into Powell, removing a key obstacle for nominee Kevin Warsh.
Prediction odds for Warsh's confirmation before May 15 surged from 30% to over 80%.
Warsh, a crypto asset holder, may influence Fed rules on stablecoins and broader crypto policy.
Senator Warren criticizes the move as a political ploy to install Trump's ally at the Fed.
Market Impact Analysis
BullishA crypto-friendly Fed chair could foster a more supportive regulatory environment for digital assets.
Speculation Analysis
Key Takeaways
- The DOJ closed its criminal investigation into Fed Chair Jerome Powell, removing a key obstacle for nominee Kevin Warsh.
- Prediction market odds for Warsh's confirmation before May 15 surged from 30% to over 80% on the news.
- Warsh, who holds crypto assets, could influence Federal Reserve policy on stablecoins and digital assets.
- Senator Warren criticized the move as a political effort to install a Trump ally at the Fed.
What Happened
The Department of Justice ended its criminal investigation into Federal Reserve Chair Jerome Powell on Friday, clearing a major roadblock for Kevin Warsh's nomination as the next Fed chair. Senator Thom Tillis, a key Republican, had threatened to block Warsh's confirmation unless the probe was dropped. With the DOJ's closure, Tillis now supports Warsh, and the Senate can move forward quickly. Warsh appeared in a confirmation hearing this week and, if confirmed, would replace Powell, whose term expires May 15. President Trump has sought to replace Powell, criticizing high interest rates, and Warsh is seen as a crypto-friendly candidate due to his personal holdings in digital assets.
The Numbers
Prediction market Kalshi's odds for Warsh's confirmation before May 15 jumped from about 30% to over 80% on the news. The DOJ's investigation involved cost overruns in a Fed building project. Senator Tillis' hold was the primary obstacle; with it lifted, the Republican-majority Senate is expected to confirm Warsh swiftly. Warsh's crypto holdings are notable as the Fed board sets financial policy, including rules for stablecoin issuers and crypto regulation.
Why It Happened
The probe's closure was directly tied to political maneuvering. Tillis conditioned his support on ending the investigation, and U.S. Attorney Jeanine Pirro stated the DOJ expects a report from the Fed's inspector general to resolve questions without criminal charges. The move unblocks Trump's effort to install a like-minded chair who could ease monetary policy and tilt the Fed toward industry-friendly crypto rules. Critics, including Senator Warren, see this as a partisan effort to sideline Powell and pack the Fed with Trump allies, while also noting the administration's continued pursuit of Fed Governor Cook.
Broader Impact
Warsh's likely confirmation hands Trump greater influence over U.S. monetary policy. For crypto markets, a Fed chair sympathetic to digital assets could accelerate stablecoin legislation and soften regulatory headwinds. However, the politicization of Fed appointments may stoke institutional concerns about central bank independence, a key factor in global market confidence.
What to Watch Next
- Senate confirmation vote timeline—expect swift action before May 15.
- Warsh's first statements on crypto regulation after taking office.
- Any new developments in the DOJ's case against Governor Cook, which could further politicize the Fed.
This article is for informational purposes only and does not constitute financial advice.
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