Digital assets are already ingrained in the financial industry, said Federal Reserve Chairman pick Kevin Warsh during his nomination hearing.
On Tuesday, during a Senate Banking Committee hearing, Warsh was mostly asked questions about interest rates, but also set the tone for how the central bank would view crypto if Warsh becomes chair.
“Do you believe that digital assets should be incorporated into our financial industry so Americans have new investment opportunities and consumer protections?” Lummis asked Warsh. The Fed chair pick said yes.
“Digital assets are already part of the fabric of our financial services industry in the United States,” Warsh said.
President Donald Trump tapped Warsh to lead the central bank earlier this year after openly criticizing current Federal Reserve Chair Jerome Powell over the past year for his handling of interest rates. Later, the Department of Justice brought a criminal investigation against Powell, alleging false statements regarding a renovation of the central bank’s headquarters.
Warsh previously served on the Federal Reserve’s Board of Governors from 2006 to 2011 under Presidents George W. Bush and Barack Obama, and formerly worked as a banker at Morgan Stanley. Warsh had spoken a few times about crypto, calling bitcoin an “important asset that can help inform policymakers.”
Ahead of Tuesday’s hearing, Warsh’s financial investments were released, disclosing dozens of crypto holdings, including in decentralized derivatives trading exchange dYdX, decentralized exchange protocol Lighter, venture capital firm Polychain, NFT-focused company Dapper Labs, as well as Solana and Optimism.
Warsh has voiced support in exploring a limited central bank digital currency, but on Tuesday told Sen. Bernie Moreno, R-Ohio, that it would be a “bad policy choice” to issue a CBDC.
A CBDC is a digital form of fiat money, directly issued and regulated by a country’s central bank. Powell has also said the central bank won’t issue a CBDC without congressional approval, though many Republicans have taken issue with a CBDC over concerns of broad monitoring of financial transactions.
‘Sock puppet’
Top Democrat of the Senate Banking Committee, Sen. Elizabeth Warren, seemingly alluded to Warsh potentially becoming a “sock puppet” for Trump.
“Having a sock puppet in charge of the Fed would also give the president access to the Fed’s powerful authorities to enrich himself, his family and his Wall Street buddies,” Warren said at the hearing. “It could mean granting special accounts to his family’s crypto company or bailouts to his friends on Wall Street if they get into trouble.”
Trump and his family’s crypto forays have particularly come into focus in trying to pass a crypto market structure bill in the Senate.
Sen. Thom Tillis, R-N.C., a member of the Senate Banking Committee whose vote is essential in passing Warsh’s nomination, has said he would not vote to advance nominees until the DOJ’s probe into the central bank’s renovations is “resolved.”
During the hearing, he called for the investigation to end and told Warsh he liked him, but couldn’t vote for his nomination until the probe was dropped.
“Mr. Warsh, the only thing I’ve found the least bit odd about you is you’ve never watched an episode of Seinfeld,” Tillis said.
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