President Trump just upended months of speculation about who will lead the Federal Reserve when Jerome Powell’s term ends in May 2026. In a casual but consequential remark at a recent conference, Trump signaled he wants to keep Kevin Hassett in his current White House role rather than nominating him as the next Fed chair. That single comment has sent shockwaves through prediction markets, elevating Kevin Warsh as the frontrunner in what’s shaping up to be one of the most consequential leadership transitions in recent monetary policy history. For crypto markets, the identity of Powell’s successor matters enormously—different leaders bring different philosophies on digital assets, stablecoins, and the regulatory boundaries between finance and innovation.
The Fed chair race 2026 has become a proxy war over how aggressively the central bank will engage with crypto. Powell maintained a cautious, institution-first posture throughout his tenure. His successor could either double down on that skepticism or crack open the door to more pragmatic dialogue on digital currencies. Understanding the players, their track records, and their likely policy directions is essential for anyone navigating crypto markets through this transition.
The Hassett Pivot That Shook Markets
Kevin Hassett had been widely discussed as Powell’s most likely successor. As Trump’s chief economic adviser with deep policy credentials, Hassett seemed like a natural fit—someone the administration trusted, someone with relevant expertise, and someone who could move monetary policy closer to Trump’s preferences. Market participants and Washington insiders had positioned Hassett as the consensus pick. Prediction markets reflected that confidence, with his odds holding steady through early 2026.
But Trump’s comments reveal a tension that few anticipated: the president values Hassett’s visibility and accessibility more than he values controlling the Federal Reserve through a sympathetic chair. “If I move him, these Fed guys don’t talk much, I would lose you,” Trump said, highlighting his concern about losing a trusted communications asset. That remark shows the president’s calculation is more transactional than ideological—he wants Hassett where he can use him publicly, not locked behind the traditional quietude of a Federal Reserve chair.
Why Hassett’s Odds Collapsed
The moment Trump’s comments hit the media, prediction markets shifted dramatically. Hassett’s odds tumbled, and traders quickly repositioned into alternative candidates. What had seemed like a settled matter—Hassett as the heir apparent—suddenly became uncertain. This kind of volatility in policy expectations affects crypto markets indirectly but meaningfully. Crypto traders factor Fed policy expectations into their positioning, and leadership uncertainty at the central bank introduces volatility into asset prices.
The collapse of Hassett’s odds also reflects a broader truth about Trump’s decision-making: announcements often come late, reversals are common, and the stated rationale may shift before final decisions are made. For market participants betting on specific policy outcomes from a Trump-aligned Fed chair, Hassett’s fade has introduced new uncertainty. It’s a reminder that even seemingly settled narratives in Washington can unravel quickly based on a single presidential comment.
The Message Trump Sent
By keeping Hassett in the White House and signaling openness to other candidates, Trump conveyed something important about his priorities. He values loyalty, communication, and day-to-day influence more than he values putting an ideological ally atop the Federal Reserve. This calculation might seem counterintuitive—wouldn’t a president want his preferred person leading the central bank? The answer is more nuanced. Federal Reserve chairs operate with significant independence by design, and that independence limits how much a president can actually control monetary policy. Trump apparently recognizes that keeping Hassett close as a communicator and adviser provides more direct utility than placing him in a role where he’d be constrained by Fed norms and congressional oversight.
Kevin Warsh Steps Into the Spotlight
With Hassett fading, Kevin Warsh has emerged as the leading contender for Fed chair. Warsh brings a profile that appeals to Republicans concerned with central-bank credibility and market confidence. He served as a Federal Reserve governor during the 2008 financial crisis, giving him genuine experience navigating systemic risks and monetary policy under stress. Since leaving the Fed, Warsh has held various advisory roles and has maintained a public presence on economic and financial policy issues. His elevation in the race reflects both Trump’s apparent comfort with his qualifications and the absence of other obvious candidates with similarly strong credentials.
What distinguishes Warsh from Hassett is precisely what Trump values in Hassett: distance. Warsh is not a constant White House presence. He brings independent credibility earned through prior Fed service, not through loyalty to Trump. That independence, paradoxically, may make him more acceptable to Congress and to markets that worry about Fed politicization. For crypto markets, Warsh represents a different kind of unknown—less ideologically aligned with Trump, more anchored in traditional central banking orthodoxy, but potentially more open to certain arguments about digital assets than Powell has been.
Warsh’s Fed Credentials and Experience
Warsh’s tenure as a Fed governor from 2006 to 2009 positioned him at the epicenter of the global financial crisis. He participated in decisions to bail out major financial institutions, manage liquidity crises, and restructure failed banks. That experience on the FOMC—the Federal Open Market Committee that sets monetary policy—provides a level of credibility that most other candidates for the 2026 transition simply don’t possess. He understands how the Fed operates internally, the constraints it faces, and the political pressures that surround monetary policy decisions.
Beyond his formal Fed role, Warsh has remained engaged with economic policy. He’s written extensively on inflation, monetary policy frameworks, and the relationship between central banks and financial stability. His intellectual work suggests someone who thinks deeply about how monetary policy decisions ripple through the broader economy. For someone evaluating whether Warsh would be likely to engage constructively with crypto policy questions, his track record shows a willingness to engage with unconventional thinking—within limits. He’s not a crusader for cryptocurrency, but he’s also not someone who dismisses novel financial instruments out of hand.
Market Perception and Political Appeal
Markets have warmed to the possibility of a Warsh nomination, seeing him as a candidate who would maintain continuity with the broad outlines of Powell’s policy while potentially offering a more market-friendly approach to regulation. The political appeal is also clear: Warsh has credentials that satisfy Republicans who worry about central-bank independence, but he’s not so ideologically radical that he would trigger Democratic opposition in a Senate confirmation hearing. He represents a kind of technocratic middle ground in an era of increasingly polarized debates over monetary policy.
For crypto specifically, Warsh’s political positioning matters. A Fed chair perceived as too aligned with Trump might face pushback from the crypto community concerned about regulatory capture. A chair perceived as too hostile to crypto would trigger opposition from digital asset advocates. Warsh, with his measured tone and genuine Fed experience, offers something closer to the status quo ante—thoughtful skepticism rather than ideological opposition.
How Crypto Policy Could Shift Under New Leadership
The crypto industry is watching this succession closely because the identity of the next Fed chair will likely shape how the central bank engages with stablecoins, digital currencies, and the broader intersection of banking and digital finance. Powell’s approach has been consistent: cautious, focused on financial stability, and reluctant to move faster than Congress on regulatory questions. A new chair could either intensify that caution or introduce more flexibility into the Fed’s posture.
Understanding the policy differences between potential chairs requires looking at both their public statements and their track records on similar issues. Warsh and Powell have different styles, and those stylistic differences could translate into meaningful policy divergence on how the Fed approaches digital assets. But substantively, both are unlikely to swing the Federal Reserve toward crypto enthusiasm. The real question is whether the next chair will maintain Powell’s cautious equilibrium or tilt further toward skepticism—or, less likely, toward measured pragmatism.
Warsh’s Actual Track Record on Digital Assets
Warsh has made occasional public comments on cryptocurrency, and those remarks reveal pragmatism more than hostility. In recent interviews, he has acknowledged Bitcoin’s potential as a store of value and even suggested it could serve as a check on monetary policy credibility. “Bitcoin does NOT make me nervous,” he said in one notable comment, comparing Bitcoin to gold and suggesting it can “often be a very good policeman for policy.” Those remarks stand in contrast to Powell’s more reserved treatment of cryptocurrency—Powell has avoided characterizing Bitcoin positively and has emphasized the need for clear regulatory frameworks before new financial instruments proliferate.
The substance of Warsh’s position appears to be pragmatic skepticism: he sees Bitcoin as a legitimate asset that people value, he doesn’t view it as inherently destabilizing, but he also remains wary of private cryptocurrencies functioning as everyday money. That stance could mean tighter guardrails on stablecoins and exchanges, but it also suggests openness to dialogue. Compared with Powell, Warsh might be more willing to engage with industry participants on how to structure regulation in ways that accommodate innovation while protecting financial stability. That’s not endorsement; it’s a different tone that could matter for policy implementation.
Stablecoins and Regulatory Direction Under a New Chair
Stablecoins remain one of the most contentious regulatory issues at the intersection of crypto and traditional finance. Powell has consistently emphasized the need for legislative clarity on stablecoins before the Fed moves forward with comprehensive oversight. His caution reflects legitimate concerns about financial stability, but it has also frustrated crypto industry participants who argue that existing regulatory frameworks could accommodate stablecoin issuance with modest additional safeguards.
A Warsh-led Fed might approach stablecoin regulation differently. His pragmatism suggests someone more willing to test regulatory approaches in real time, with appropriate monitoring and circuit-breaker mechanisms. That doesn’t mean permissiveness—it means a potentially faster path to working frameworks rather than an indefinite holding pattern. For crypto markets, the question of stablecoin regulation matters enormously because stablecoins are the functional bridge between traditional finance and decentralized systems. How aggressively or restrictively the Fed oversees stablecoins affects the entire ecosystem’s ability to onboard capital and users.
Powell’s Final Months and the Transition Landscape
Jerome Powell’s term as Federal Reserve chair ends on May 15, 2026. He can remain on the Board of Governors after stepping down—his board term extends to 2028—but Fed chairs rarely stay on the board after relinquishing the chair. Powell will likely depart from the Fed entirely when his chairmanship concludes. Those final months before the transition will be consequential, both for monetary policy and for the political positioning around the next chair.
With inflation easing but not fully defeated, markets expect the Fed to maintain a relatively steady policy course through Powell’s final months. Traders have priced in the possibility of one more rate cut before May 2026, contingent on economic data cooperating. But any major policy pivot seems unlikely, reinforcing the sense that Powell’s successor will inherit significant responsibility for defining monetary policy direction through the remainder of 2026 and beyond. That responsibility includes decisions about how the Fed engages with digital assets and financial innovation more broadly.
The Political Backdrop and Fed Independence Concerns
Powell faces an unusual political backdrop as his tenure winds down. A Department of Justice investigation has included subpoenas related to his congressional testimony on cost overruns for the Fed’s headquarters renovation. Powell has stated that the investigation does not affect monetary policy decisions, and there’s no credible evidence suggesting it has. But the investigation has intensified political debate over central-bank independence at precisely the moment when the leadership transition is approaching.
That political pressure matters for understanding the succession. Trump has been vocally critical of Powell and the Fed, and his administration’s investigations into Fed operations reflect broader skepticism about central-bank autonomy. The next Fed chair will inherit a political environment in which central-bank independence is contested in ways that would have been unthinkable a decade ago. A chair perceived as too independent might face pressure from the administration; a chair perceived as too aligned with Trump might face opposition from Congress and markets. Warsh’s profile as someone with Fed experience but not currently embedded in the Trump administration might position him as a compromise candidate who can navigate that minefield.
Market Expectations for Late-2026 Monetary Policy
Looking beyond the transition itself, markets are pricing in relatively modest monetary policy action through the remainder of 2026. Fed policy expectations have stabilized around a baseline assumption that interest rates will remain relatively unchanged through early-to-mid 2026, with potential adjustments contingent on economic data. The CME FedWatch Tool shows markets assigning significant probability to rates staying flat through April 2026, with limited expectation for major policy moves until after the leadership transition is complete.
That market positioning suggests that the immediate policy continuity between Powell and his successor will be more important than any ideological differences between them. The next Fed chair will take office in an environment where major rate changes are not anticipated, allowing some runway to establish credibility and set a policy tone before major decisions are required. For crypto markets, that stable policy environment through mid-2026 reduces uncertainty about near-term monetary conditions, though medium-term policy direction under new leadership remains an open question.
What’s Next
The Fed chair race 2026 remains unsettled despite Trump’s comments about Hassett. Kevin Warsh has moved to the front of the queue, but other candidates may emerge as the May transition approaches. The key variable is how Trump’s preference evolves as he considers the trade-offs between loyalty and credibility. Warsh offers credibility that Hassett might lack in certain quarters, but he also offers less day-to-day alignment with Trump’s administration. For crypto markets navigating 2026, the succession matters because Fed policy shapes interest rates, risk appetite, and regulatory priorities that ripple through digital asset valuations.
The crypto industry should prepare for a succession that will likely maintain continuity with Powell’s fundamental caution about digital assets while potentially introducing more flexible engagement on regulatory specifics. Neither Hassett nor Warsh is an obvious crusader for cryptocurrency adoption or deregulation. But Warsh’s pragmatism and independence might create more space for constructive dialogue between the Fed and the crypto ecosystem than Powell’s more cautious posture has allowed. That’s a modest upside for crypto advocates, not a transformative one—but in the context of Fed policy, modest shifts in tone and approach can compound into meaningful differences over time.
Ultimately, the Fed chair succession of 2026 is less about crypto specifically and more about whether the Federal Reserve will maintain its Powell-era institutional caution or adopt a more market-pragmatic approach. That distinction will shape not only cryptocurrency policy but also the Fed’s engagement with financial innovation, stablecoin regulation, and the broader question of how central banks navigate an economy increasingly dependent on digital technologies. The answer will matter for years.
