Hassett's Fed Bid Promises Crypto Clarity, Dovish Policy

Prediction markets have positioned Kevin Hassett, the White House National Economic Council director and prominent pro-crypto advocate, as the leading candidate to replace Federal Reserve Chair Jerome Powell, with Polymarket odds jumping to 57% following a Bloomberg report. This shift has sparked speculation about the potential implications for monetary policy and digital asset markets, given Hassett's dovish stance on interest rates and his financial ties to crypto exchange Coinbase.

Hassett's ascent as a frontrunner reflects his alignment with President Donald Trump's economic agenda, particularly his advocacy for aggressive rate cuts and his critique of current inflation forecasts. He has challenged conventional Wall Street narratives on inflation, citing a San Francisco Fed study that suggests tariffs have a deflationary effect rather than inflationary. "Wall Street has been quite wrong on their forecasts of inflation surge, which did not happen," Hassett stated, projecting core PCE inflation of 2.9% to 3% by year-end. His views position him as a potential catalyst for a policy shift toward looser monetary conditions, which could bolster risk assets and crypto markets.

Hassett's pro-crypto credentials further distinguish him from other contenders. As a member of the White House digital asset working group, he helped shape a report described as a "regulatory Bible" for the sector by The Digital Chamber's CEO. Additionally, he disclosed a $1–$5 million investment in Coinbase and received $50,001 from its Academic and Regulatory Advisory Council. These connections have drawn attention to potential conflicts of interest, particularly as the Fed oversees banking regulations for crypto exchanges and stablecoin issuers.

Economists like Tiffany Wilding of Pacific Investment Management Co. note that Hassett's dovish profile could accelerate rate cuts, which might drive investors toward riskier assets such as Bitcoin. However, the Federal Open Market Committee's democratic process means any aggressive policy shifts would require broader consensus. Current Fed Governor Christopher Waller, the second-most-likely contender with 26% odds, represents a more cautious approach to monetary policy and technology integration.

The selection process remains fluid, with Treasury Secretary Scott Bessent leading the vetting and an official announcement expected by early 2026. While Trump has threatened to replace Powell earlier via the expiring Steve Miran seat, the Senate confirmation process adds uncertainty. Critics warn that Hassett's crypto holdings could raise questions about regulatory impartiality, though proponents argue his expertise would enhance the Fed's engagement with digital assets.

For crypto markets, a Hassett appointment could signal regulatory clarity and institutional adoption, aligning with his advocacy for deeper cuts to interest rates. Juan Leon, a Bitwise strategist, described the prospect as "strongly bullish" for the sector, citing Hassett's pro-innovation stance. Conversely, a Waller-led Fed might prioritize stability over rapid technological integration.

As the Fed's next chair shapes both monetary policy and the U.S. approach to digital assets, markets are closely watching for signals on rate cuts and regulatory direction. With Polymarket odds favoring Hassett, the potential for a dovish, crypto-friendly Fed chair underscores a pivotal moment for financial markets and the evolving relationship between traditional finance and digital assets.