What signals worth paying attention to in the crypto industry after the Wosh hearing?

Author: Chloe, ChainCatcher

Federal Reserve nominee Waller attended the U.S. Senate Banking Committee confirmation hearing at 10:00 PM yesterday, marking Waller’s first public appearance since being nominated by Trump in January of this year, where he publicly articulated his views on monetary policy and central bank governance.

Previously, Waller submitted financial disclosures revealing his investment holdings in the crypto industry. Waller owns stakes in dozens of blockchain and digital asset companies, with investments spanning DeFi lending, decentralized derivatives, Layer 1 and Layer 2 networks, prediction markets, and even Bitcoin payment infrastructure. To comply with government ethics standards, he has now committed to divesting most of these holdings.

The significance of this hearing is self-evident; for the crypto market, every statement Waller makes could influence liquidity flows.

Key points of the hearing: How Waller responds to a series of questions

According to a prior Bloomberg report, Trump has explicitly expressed hope that the new Fed chair will lower interest rates. Waller will undoubtedly face a series of questions about the Fed’s independence, testing whether he can reassure Washington while convincing financial markets that his policy direction will be based on genuine market needs.

At last night’s hearing, the core question Waller faced was: Can he maintain independence under pressure from Trump to cut rates? Waller clearly responded that Trump has never asked him to commit to any specific rate cut at any particular time, “The President has never asked me to pre-decide, promise, or lock in any rate decision. He has not pressured me, and I would never agree to do so.” When asked if he would become Trump’s “sock puppet,” Waller firmly denied it, stating that if confirmed, he would lead the Fed as an independent actor.

However, Democratic senators were not easily convinced. Senator Ruben Gallego sharply pointed out that The Wall Street Journal had reported that Trump, during a 45-minute meeting at the White House with Waller, asked whether he could trust Waller to support rate cuts, a report later confirmed by Trump himself. Gallego bluntly said, “Someone is lying here — it’s either you or President Trump.” Waller responded that the reporter “either needs better sources or higher journalistic standards,” but he admitted he did not request a correction at the time nor did he respond to Trump’s confirmation of the report to WSJ.

On the morning of the hearing day, Trump more directly stated in an interview with CNBC that if Waller’s Fed fails to cut rates, he would be “disappointed,” and also said he does not intend to pressure the Justice Department to end its investigation of Powell. These comments undoubtedly added more political tension to the hearing.

The chief Democrat on the Senate Banking Committee, Elizabeth Warren, launched the most aggressive attack. She opened by directly accusing Waller of being “unsuitable to serve as Fed Chair,” alleging that Trump is trying to dismantle the Fed’s independence to serve short-term political gains ahead of the midterm elections. Warren also tested Waller on the 2020 election results (Trump has long claimed the 2020 election was “rigged”), asking, “Did Trump lose the 2020 election?” Waller refused to directly say “Trump lost,” only stating that “the election results have been certified,” attempting to separate political issues from the Fed’s responsibilities.

Regarding policy stance, Waller characterized the current inflation predicament as a “catastrophic policy mistake” by the Fed, noting that post-pandemic prices have surged by 25% to 35%, indicating serious misjudgment. He called for “regime change,” including establishing a new inflation framework, reforming communication strategies, and using a combination of interest rate adjustments and balance sheet management to combat inflation. However, he clarified that “regime change” refers to “policy framework reform,” not personnel purges, and explicitly stated he would not fire regional Fed bank presidents.

Waller also expressed dissatisfaction with the practice of Fed officials making early predictions about interest rate paths, saying, “Too many Fed officials are commenting prematurely on the next meeting, the next quarter, or even next year’s rates. I think that’s unhelpful.” He prefers “full and vigorous internal debate” during policy meetings rather than following rehearsed scripts. Notably, Waller did not commit to maintaining the current practice of holding press conferences after every FOMC meeting, which could subtly alter future Fed transparency.

Regarding timeline, Republican Senator Thom Tillis, while supporting Waller’s nomination, insisted that he would not support the confirmation until the Justice Department’s investigation of Powell concludes. He urged, “Let’s end this investigation so I can support your confirmation.”

However, some signals from Democratic senators suggest potential support for Waller. Senator Catherine Cortez Masto responded positively after Waller discussed re-evaluating inflation measures, saying she “hopes you’re right,” and expressed respect for his economic theories. Senator Mark Warner, who was absent due to a family bereavement, is also seen as a potential supporter.

What does this mean for the crypto market?

For the crypto market, this hearing’s significance extends beyond future interest rate paths and dollar liquidity; it also concerns how the Fed and banking regulators will handle the deeper integration of crypto capital into traditional finance.

Notably, while Waller repeatedly emphasized the importance of monetary policy independence, he was reluctant to extend the same standards to banking policy and regulation. This drew strong questioning from Warren: given that Trump’s family has already extended into the system through crypto financial businesses like World Liberty Financial and even applied for banking licenses, could the Fed in the future face direct pressure from the President’s family’s commercial interests regarding discount window access, bank entry, or regulatory discretion?

Waller has also previously called for a significant reduction of the Fed’s $6.7 trillion balance sheet but has yet to reveal specific plans. Several officials and scholars have warned him against being too aggressive or hasty. The pace and scale of balance sheet reduction will directly impact market liquidity, which is a core variable in crypto asset pricing.

Additionally, Waller himself has extensive investments in digital assets. According to his regulatory disclosures, his portfolio includes stakes in DeFi companies such as Solana, Lemon Cash, and Flashnet, as well as other crypto-related funds. Under Fed trading rules, officials are prohibited from holding large crypto positions, so if Waller is confirmed, these holdings must be divested.

It can be inferred that a Fed chair deeply involved in the crypto industry, regardless of whether his tenure will directly influence digital asset regulation, signals that the policymaking leadership is not unfamiliar with this emerging asset class. Coupled with Waller’s push for deregulation and his ambition to reshape the Fed’s economic model and communication framework, the crypto market has reason to adopt a cautiously optimistic stance toward this potential new chair.

Finally, while the hearing ostensibly focused on Fed independence, it also represented a direct contest over the boundaries of power between the White House, Congress, and the central bank. Waller demonstrated highly political tactics, avoiding direct opposition to Trump while repeatedly emphasizing independence to reassure markets. However, his avoidance of questions about the 2020 election results and refusal to commit to maintaining press conferences leave some ambiguity regarding his independence.

With several senators blocking the nomination, whether Waller can officially succeed Powell before his term ends on May 15 depends on the outcome of the Justice Department investigation, which Trump has explicitly refused to back down from. Regardless of the timeline, Waller’s policy direction is already clear: a new era of the Fed that favors productivity narratives to pave the way for rate cuts, promotes “leaner” central banking, and pushes for systemic reforms. For the crypto market, the macro narrative over the next four years could undergo significant shifts.