What signals worth noting for the crypto industry after the Washed hearing?

Author: Chloe, ChainCatcher

Federal Reserve nominee Waller appeared before the Senate Banking Committee at 10:00 PM yesterday for an appointment confirmation hearing—his first official public appearance since being nominated by Trump in January this year, during which he publicly laid out his views on monetary policy and his vision for central bank governance.

Previously, Waller filed financial disclosures that revealed his investment plans in the crypto industry. Waller holds equity stakes in more than dozens of blockchain and digital asset companies, with his investment interests spanning DeFi lending, decentralized derivatives, Layer 1 and Layer 2 networks, prediction markets, and even Bitcoin payment infrastructure. Now, in order to comply with government ethics requirements, he has pledged to divest the vast majority of his holdings.

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

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

According to earlier reports cited by Bloomberg, Trump has made clear that he wants the newly appointed chair to lower interest rates. Waller will undoubtedly face a series of questions about the Fed’s independence as well—testing whether he can both reassure Washington while also persuading financial markets that his policy direction will be based on genuine market needs.

At last night’s hearing, the central line of questioning Waller faced was: whether he can remain independent under Trump’s pressure to cut rates. Waller responded clearly: Trump “has never asked me to commit to, promise, or lock in any rate decisions at any specific time point. He hasn’t asked, pressured, or demanded that, and I would never agree to do that.” When asked whether he would become Trump’s “sock puppet,” Waller flatly denied it, saying that if confirmed, he would lead the Fed as an independent actor.

However, Democratic lawmakers were not so easily convinced. Senator Ruben Gallego sharply pointed out that the Wall Street Journal had reported that during a 45-minute meeting in the White House, Trump pressed Waller on whether he could be trusted to support rate cuts—and that Trump himself later confirmed the report to the newspaper. Gallego said bluntly, “Someone here is lying—either you or President Trump.” In response, Waller said the reporter “either needs better sources or higher journalistic standards,” but he admitted that at the time he did not request a correction and did not respond to the fact that Trump personally confirmed the report to the Wall Street Journal.

Yet just on the morning of the hearing, Trump took an even more direct stance in an interview with CNBC. He admitted that if the Fed led by Waller failed to cut rates, he would be “disappointed,” and he also said he does not plan to pressure the Department of Justice to end its investigation of Powell. Those remarks undoubtedly added another spark to the political tension around the hearing.

Elizabeth Warren, the top Democratic member of the Senate Banking Committee, launched the most forceful offensive. In her opening statement, she directly accused Waller of being “unsuitable to serve as the Fed chair,” alleging that Trump is trying to dismantle the Fed’s independence safeguards, with the aim of making monetary policy serve short-term economic prosperity ahead of the midterm elections. Warren further tested Waller using the results of the 2020 election (a point Trump has long insisted was “rigged”), asking: “Did Trump lose the 2020 election?” But Waller never wanted to say directly that “Trump lost.” Instead, he brushed it off by saying that the election result had “already been certified,” attempting to separate the political issue from the Fed’s responsibilities.

As for policy positions, Waller characterized the current inflation predicament as the Fed’s “fatal policy misstep.” He pointed out that since the pandemic, prices across the board have risen by 25% to 35%, meaning the Fed has seriously fallen out of line. He called for “regime change,” including building a new inflation framework, reforming communication methods, and using both interest rates and the balance sheet to tackle inflation. However, he clarified that the so-called “regime change” refers to “a change in the policy regime,” not personnel purges—stating explicitly that he would not fire the presidents of regional Federal Reserve Banks.

Meanwhile, Waller expressed dissatisfaction with the convention of Fed officials issuing forward-looking predictions about the interest rate path in advance. He said, “Too many Fed officials comment in advance on the direction of interest rates for the next meeting, the next quarter, or even next year. I think that’s quite unhelpful.” He said he prefers “full and fierce internal debate” during policy meetings rather than operating according to a rehearsed script. Notably, Waller did not commit to maintaining the current practice of holding press conferences after every FOMC meeting, which implies that the future Fed’s policy transparency could see subtle changes.

On the timeline, Republican Senator Thom Tillis, although he clearly stated his support for Waller to serve as chair, still insisted that he would not allow the nomination to move forward before the Department of Justice completes its investigation of Powell. He urged during the hearing: “Let’s end this investigation, so I can support your confirmation.”

However, the hearing also revealed signs that some Democratic lawmakers may support Waller. After Waller discussed revisiting how inflation is measured, Senator Catherine Cortez Masto responded positively, saying, “I hope you’re right,” and stating that she respects his theoretical beliefs as an economist. Senator Mark Warner was also viewed as a potential supporter despite not attending the hearing due to a family bereavement.

What does this mean for the crypto market?

For the crypto market, the significance of this hearing lies not only in the future interest-rate path and dollar liquidity, but also in how the Fed and the banking regulatory framework will handle the deeper embedding of crypto capital into traditional finance.

Notably, although Waller repeatedly emphasized in the hearing that monetary policy must remain independent, he was unwilling to extend the same standard to the realms of banking policy and regulation. That drew sharp questioning from Warren: given that Trump’s family has already expanded into the crypto financial sector through entities such as World Liberty Financial—and even applied for bank licenses—could the Fed in the future face direct pressure from the President’s family’s business interests if there are matters involving the discount window, bank access, or regulatory discretion?

Previously, Waller also made clear that he wanted to cut the Fed’s $6.7 trillion balance sheet substantially, but so far he has not disclosed specific implementation plans. Multiple officials and scholars have warned him against being overly aggressive or rushing. The pace and scale of balance sheet reduction will directly affect market liquidity, which is one of the core variables in pricing crypto assets.

In addition, Waller himself has a broad investment footprint in the digital asset space. According to his regulatory disclosure filings, his investment portfolio includes equity stakes in multiple companies in decentralized finance, including Solana, Lemon Cash, and Flashnet, as well as other funds with crypto-asset exposure. Under Fed trading rules, officials are prohibited from holding large positions in cryptocurrencies; therefore, if Waller formally takes the role, these holdings must be divested.

It can be inferred that a Fed chair who is deeply involved in the crypto industry—regardless of whether his tenure will directly influence digital asset regulation—at least suggests that decision-makers at the top are not unfamiliar with this emerging asset class. Combined with Waller’s policy inclination toward deregulation and his ambition to reshape the Fed’s economic model and communication framework, the crypto market has reason to remain cautiously optimistic about this potential new chair.

Finally, while this hearing ostensibly focused on Fed independence, in reality it was a direct confrontation over the boundaries of power among the White House, Congress, and the central bank. Waller demonstrated tactics of a highly political nature at the hearing: he neither openly contradicted Trump nor angered the president, and he sought to calm the market by repeatedly emphasizing independent decision-making. But by sidestepping questions about the 2020 election results and refusing to commit to maintaining the current press-conference frequency, he also left his “independence” pledge with a degree of ambiguity.

With Democratic senators blocking him in multiple instances, whether Waller can be formally confirmed before Powell’s term ends on May 15 depends on the direction of the Department of Justice investigation, and Trump has already made clear he does not intend to yield. Regardless of the final timeline, the policy direction represented by Waller is already clear: a new era of the Fed is being set in motion, one that is more inclined to pave the way for rate cuts with a productivity narrative, push for a “leaner” central bank, and drive systemic reforms. For the crypto market, the macro-narrative framework over the next four years could see a major turn.