The Implications of Trump's Fed Chair Shortlist on Crypto and Financial Policy

The Federal Reserve’s next chair will inherit a pivotal role in shaping not only U.S. monetary policy but also the regulatory landscape for emerging assets like cryptocurrency. President Donald Trump’s shortlist for replacing Jerome Powell—set to expire in May 2026—reveals a deliberate tilt toward candidates who could catalyze a shift in the Fed’s approach to digital assets and interest rates. For investors, this signals a potential realignment of strategic asset allocation priorities in a world where crypto-friendly regulators and accommodative monetary policy may converge.

A Fed Reimagined: Crypto-Friendly Candidates and Their Stances

Trump’s shortlist includes at least three individuals with notable openness to cryptocurrency: Rick Rieder of BlackRock, Christopher Waller, and Michelle Bowman. Rieder, BlackRock’s chief investment officer, has been a vocal advocate for Bitcoin, declaring in 2024 that it could become a “core part of the asset allocation framework” as public and institutional confidence grows [1]. Waller, a Fed Governor, has argued that crypto payments represent a “natural technological evolution” and that banks have “nothing to fear” from their adoption [1]. Meanwhile, Bowman, the Fed’s vice chair for supervision, has encouraged staff to hold small amounts of crypto to gain firsthand understanding of the technology [1]. These candidates’ views contrast sharply with Powell’s cautious stance, which has framed Bitcoin as a gold competitor rather than a currency [1].

The inclusion of David Zervos of Jefferies, whose firm has backed crypto platforms like eToro and Circle, further underscores the administration’s interest in fostering a regulatory environment conducive to digital assets [1]. If appointed, such a chair could accelerate the Fed’s engagement with crypto, potentially easing regulatory hurdles for institutional adoption and infrastructure development.

Monetary Policy and the Path to Rate Cuts

Beyond crypto, Trump’s shortlist reflects a broader agenda: lowering interest rates. Candidates like Kevin Warsh, Kevin Hassett, and Waller have all signaled support for rate cuts, with Waller and Bowman already aligned with Trump’s push for looser monetary policy [1]. This aligns with the president’s strategy to replace Fed Governor Lisa Cook with loyalists, potentially securing a majority on the Board of Governors to advance his agenda [1]. Analysts warn that such a “MAGA makeover” could undermine the Fed’s independence, but for investors, it raises the prospect of a prolonged period of accommodative policy—a tailwind for risk assets.

Strategic Asset Allocation in a New Era

A Fed chair with crypto-friendly leanings and a mandate to cut rates could reshape asset allocation strategies. Lower interest rates typically boost liquidity, making volatile assets like Bitcoin and Ethereum more attractive as yields on traditional fixed income decline. Rieder’s assertion that Bitcoin’s role in portfolios will grow as comfort levels rise [1] suggests that institutional investors may increasingly allocate to crypto as regulatory clarity improves.

Moreover, a Fed more open to crypto could spur innovation in stablecoins, CBDCs, and DeFi infrastructure, creating new investment opportunities. For example, firms involved in blockchain-based payment systems or custody solutions may benefit from a regulatory environment that prioritizes innovation over restriction.

Risks and Resistance

Critics argue that Trump’s efforts to reshape the Fed face legal and institutional hurdles. Governor Lisa Cook has already threatened to sue to retain her seat [1], and the Fed’s independence is a cornerstone of its credibility. A chair perceived as politically aligned could face pushback from Congress and global markets. However, the administration’s momentum—bolstered by Bessent’s oversight of candidate interviews [1]—suggests a determined push to prioritize Trump’s economic vision.

Conclusion

The potential appointment of a crypto-friendly Fed chair represents a tectonic shift for investors. Strategic asset allocation must now account for a regulatory environment that could normalize crypto as a legitimate asset class while maintaining accommodative monetary policy. For those prepared to navigate this transition, the intersection of innovation and policy offers both risk and reward.

Source:
[1] Trump has 11 on his Fed chair list, 3 may be crypto-friendly [https://cointelegraph.com/news/trump-11-people-fed-chair-shortlist-some-crypto-ties]
[2] Who's on Trump's short list for Jerome Powell's replacement [https://fortune.com/2025/08/06/trump-shortlist-fed-powell-warsh-hassett-waller/]
[3] How Trump could give the Fed a MAGA makeover [https://www.cnn.com/2025/08/28/economy/trump-fed-lisa-cook]
[4] Trump's Fed Overhaul: Crypto-Friendly Candidates in the Crosshairs [https://www.ainvest.com/news/trump-fed-overhaul-crypto-friendly-candidates-crosshairs-2508/]