Trump's Fed Chair Hunt: Crypto-Friendly Picks Signal Policy Shift

President Donald Trump has compiled a shortlist of 11 candidates to succeed Jerome Powell as the next chair of the U.S. Federal Reserve, with at least three of them exhibiting an open stance toward cryptocurrency. Treasury Secretary Scott Bessent, who is overseeing the selection process, indicated that interviews with the candidates will begin around Labor Day and that a shortlist of three to four candidates will be presented to the president afterward. Trump, who has frequently criticized Powell’s handling of monetary policy and interest rates, seeks a leader who can restore the Federal Reserve’s credibility and align with his economic vision.

Among the candidates, Fed Governor Christopher Waller is widely seen as the frontrunner, according to prediction market data from Polymarket, which gives him a 27% chance of being appointed. Waller, a long-time member of the Federal Reserve Board, has consistently advocated for rate cuts and has emphasized the importance of an independent central bank. Another prominent name on the list is Michelle Bowman, the Fed’s vice chair for supervision, who has recently signaled openness to crypto investments for staff to better understand the technology. Both Waller and Bowman align with Trump’s broader policy preferences, particularly in regulatory reform and fiscal restraint.

James Bullard, the former St. Louis Fed president, and Kevin Hassett, Trump’s top economic adviser, are also strong contenders. Bullard has expressed willingness to participate in the nomination process if the administration sets up a framework that prioritizes the value of the dollar and price stability. Hassett, for his part, has been a vocal supporter of Trump’s economic agenda and has emphasized the need for the Federal Reserve to respond more aggressively to inflationary trends. Both candidates are viewed as aligning closely with Trump’s policy priorities, including a preference for lower interest rates.

Crypto-friendly candidates like David Zervos, Rick Rieder, and Waller stand out for their positive views on digital assets. Zervos, the chief market strategist at Jefferies, has acknowledged his potential nomination and emphasized his connections with Trump and other administration officials. Rieder, the chief investment officer at BlackRock, has praised Bitcoin as a potential component of the asset allocation framework and has acknowledged the growing acceptance of cryptocurrency, particularly among younger investors. Waller and Bowman have also made statements that suggest a more favorable view of crypto, signaling a potential shift in the Fed’s approach to digital assets under a new chair.

The Trump administration’s emphasis on appointing a Fed chair with a pro-crypto stance reflects broader expectations that lower interest rates could stimulate investment in riskier assets, including cryptocurrencies. Historically, rate cuts have led to increased liquidity in the market, benefiting volatile assets like Bitcoin and Ethereum. This dynamic is anticipated to influence the selection process, as the administration seeks a leader who can steer monetary policy in a direction that supports its economic strategy and investor confidence in digital assets.

Mohamed El-Erian, the chief economic advisor at Allianz, has highlighted Rieder and Kevin Warsh as particularly strong candidates due to their deep understanding of financial markets and communication skills. Warsh, a former Fed governor, has also called for a “regime change” at the Fed, advocating for a reevaluation of the central bank’s approach to monetary policy. His experience and advocacy for structural changes align with Trump’s criticisms of the current Federal Reserve leadership, further positioning him as a potential candidate with both expertise and a policy outlook that resonates with the administration’s goals.

Source: [1] Bessent vets potential Powell successors; Trump's shortlist ... (https://www.foxbusiness.com/politics/bessent-vets-potential-powell-successors-trumps-shortlist-staring-take-shape) [2] 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) [3] Hassett: Trump's Fed chair pick may take few months (https://www.argaam.com/en/article/articledetail/id/1838878) [4] Bessent Says 11 'Strong' Candidates in Line to Replace ... (https://coingape.com/bessent-says-11-strong-candidates-could-replace-fed-chair-jerome-powell/) [5] Top economist says two contenders to replace Fed Chair ... (https://finance.yahoo.com/news/top-economist-says-two-contenders-185412370.html)