The Implications of Trump's Reported Support for Kevin Hassett as Potential Fed Chair: A Dual Analysis of Monetary Policy and Crypto Markets

The potential nomination of Kevin Hassett as the next Federal Reserve Chair under President Donald Trump has ignited significant speculation about the trajectory of U.S. monetary policy and its ripple effects on financial markets, particularly cryptocurrencies. As a key architect of Trump’s economic agenda, Hassett’s dovish leanings and close alignment with the president’s priorities—such as rapid interest rate cuts and deregulation—position him as a wildcard in a Fed landscape already strained by political pressures and inflationary challenges.

Hassett’s Policy Preferences and the Fed’s Dovish Shift

According to a report by CNBC, Hassett is a leading contender for the Fed Chair, with a 17.2% chance of appointment, trailing only Kevin Warsh and Christopher Waller [1]. His advocacy for aggressive rate cuts reflects Trump’s frustration with current Fed Chair Jerome Powell, whom the president has criticized for “being too late” to lower borrowing costs [2]. Hassett has publicly argued that the Fed’s recent actions are “politically motivated” and that inflation has already eased due to reduced fiscal stimulus, suggesting a preference for a more accommodative stance [3].

This dovish orientation could signal a departure from the Fed’s traditional inflation-targeting framework. A plurality of respondents in the CNBC Fed Survey indicated support for eliminating average inflation targeting (AIT), a policy that allowed temporary inflation overshoots to offset past undershoots [1]. Hassett’s potential leadership might accelerate this shift, prioritizing economic growth over strict inflation control—a stance that could exacerbate market volatility if credibility is compromised.

Crypto Market Implications: Deregulation and Institutional Adoption

Hassett’s influence extends beyond interest rates. As National Economic Council Director, he has been instrumental in shaping the Trump administration’s pro-crypto agenda, including rescinding Staff Accounting Bulletin 121 to ease bank access to crypto custodial services [4]. His personal investment in Coinbase, a major crypto exchange, further underscores his alignment with digital asset innovation [5].

A Fed Chair with Hassett’s profile could foster a regulatory environment more favorable to cryptocurrencies. By reducing institutional barriers—such as clearer guidelines for stablecoins and tokenization—the administration might encourage broader adoption of digital assets. This aligns with the Trump-era Executive Order on “Strengthening American Leadership in Digital Financial Technology,” which emphasizes innovation while maintaining oversight [4]. However, the interplay between dovish monetary policy and crypto markets remains complex. Lower interest rates typically drive risk-on behavior, potentially inflating crypto valuations, but Trump’s proposed tariffs could introduce macroeconomic headwinds that offset such gains [6].

Risks and Investor Considerations

While Hassett’s nomination could benefit crypto markets in the short term, several risks persist. His lack of central banking experience raises concerns about the Fed’s independence and technical expertise [3]. Additionally, a Fed Chair perceived as overly aligned with political priorities might struggle to maintain market trust, particularly if inflationary pressures resurge. For investors, this duality presents both opportunities and hazards:

1. Opportunities: A dovish Fed could spur liquidity-driven gains in crypto and growth equities.
2. Hazards: Policy missteps or credibility erosion might trigger volatility, especially if inflationary expectations rise.

Conclusion

Trump’s reported support for Hassett reflects a broader push to realign the Fed with a growth-centric, deregulatory agenda. While this could create a more crypto-friendly regulatory environment, the long-term success of such a strategy hinges on balancing political objectives with the Fed’s mandate to stabilize prices. Investors should monitor the Fed’s communication strategies and inflation data closely, as the interplay between Hassett’s potential leadership and market dynamics will likely shape both traditional and digital asset classes in 2025.

Source:
[1] Hassett likely to be Trump's pick for Fed chief, though Warsh is more qualified, CNBC [https://www.cnbc.com/2025/08/20/hassett-likely-to-be-trumps-pick-for-fed-chief-though-warsh-is-more-qualified-cnbc-survey-finds.html]
[2] Trump says short list for Fed chair includes Hassett and Warsh, Fidelity Fixed Income [https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202509051744RTRSNEWSCOMBINED_L1N3US0WV_1]
[3] Kevin Hassett Emerges as Potential Fed Chair Under Trump, Markets.com [https://www.markets.com/news/kevin-hassett-potential-fed-chair-trump-356-en-EU]
[4] Trump Administration Transforms U.S. Policy on Digital Assets, DWT [https://www.dwt.com/blogs/financial-services-law-advisor/2025/01/trump-transforms-digital-assets-policy]
[5] Kevin Hassett, a senior advisor to Trump, has revealed he holds Coinbase assets valued at a minimum of $1 million, Radom [https://www.radom.com/insights/kevin-hassett-a-senior-advisor-to-trump-has-revealed-he-holds-coinbase-assets-valued-at-a-minimum-of-1-million-according-to-bloomberg]
[6] Trump's job market is struggling, building the case for Fed rate cuts, Politico [https://www.politico.com/news/2025/09/05/trumps-job-market-struggling-fed-rate-cut-00546137]