As US Federal Reserve (Fed) Chair Jerome Powell's term ends in May, the Trump administration has considered at least 11 strong candidates for the new chairman. What's striking is that some of these candidates have a positive outlook on cryptocurrencies. Markets are interpreting this development as a harbinger of significant changes in both interest rate policies and regulatory frameworks for crypto assets.
Strong Candidates for Powell's Seat
US Treasury Secretary Scott Bessent announced on Fox News that they have identified 11 "very strong candidates" and will begin narrowing down the list next month. According to CNBC's August 13 report, the list includes Dallas Fed President Lorie Logan, former St. Louis Fed President James Bullard, Fed Vice President Philip Jefferson, Fed Governor Chris Waller, Fed Deputy Chairman of Supervision Michelle Bowman, and former Fed Governor Larry Lindsey.
Among the candidates are Bush-era economic advisor Marc Sumerlin, investment bank Jefferies' chief market strategist David Zervos, and BlackRock's global fixed-income securities investment director Rick Rieder.
Candidates with a Positive Approach to Crypto
Among the most notable candidates from a crypto perspective are Rick Rieder of BlackRock, Fed Governor Chris Waller, and Fed Deputy Chair of Oversight Michelle Bowman.
Rieder has stated on various platforms since 2020 that Bitcoin is "here to stay," and in 2024, he told the Wall Street Journal that Bitcoin could eventually play a significant role in investment portfolios. The fact that BlackRock already holds the largest Bitcoin and Ethereum ETFs further supports this claim.
Bowman, in August, argued that Fed employees should be able to invest small amounts in crypto to gain a grasp of the technology. He expressed the view that this step would contribute to a better understanding of crypto among central bank staff. Waller, however, emphasized that there should be no fear of crypto payments operating outside the banking system, emphasizing that it is merely a new "technology."
Powell's View on Cryptocurrency is More Cautious
Current Chairman Jerome Powell has made limited statements on cryptocurrencies to date. While Powell acknowledged in a speech in June that crypto assets are becoming increasingly mainstream, he is generally known for his cautious approach. In December, he stated that he sees Bitcoin as a competitor to gold, not the US dollar.
Jefferies' Crypto Connections
Jefferies, the investment bank where candidate David Zervos works, also stands out for its close ties to crypto. The bank supported the IPOs of crypto-focused companies such as eToro, Circle, Bullish, and Figure. It also provided early financing for Michael Saylor's Bitcoin purchases.
While Powell's term as Fed chairman ends in May, his term on the board will last until 2028. However, Trump's choice of candidate is critical for markets. The Fed's interest rate decisions directly impact market liquidity and risk appetite. Lower interest rates generally increase interest rates toward riskier assets (especially cryptocurrencies), while interest rate hikes drive investors toward safe havens.
With Trump's announcement of the new president, there is talk of potential for significant volatility in both the US financial markets and the crypto ecosystem.
