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

Author: Chloe, ChainCatcher

Federal Reserve nominee Waller appeared before the U.S. Senate Banking Committee for the nomination hearing at 22:00 yesterday. This was also Waller’s first official public appearance since receiving Trump’s nomination in January this year, when he publicly laid out his views on monetary policy and his vision for central bank governance.

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

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

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

According to a prior report cited by Bloomberg, Trump has made it clear that he wants the new chair to lower interest rates. Waller will undoubtedly face a series of questions about the Federal Reserve’s independence as well—testing whether he can both reassure Washington and also convince financial markets that its policy direction will be based on genuine market needs.

At last night’s hearing, the central question Waller faced was whether he can maintain independence under Trump’s pressure to cut rates. Waller responded clearly: Trump had never asked him to commit to rate cuts at any specific point in time. “The President has never asked me to decide in advance, commit to, or lock in any interest rate decisions. He hasn’t asked, and he hasn’t pressured me, and I would never agree to do it.” When asked whether he would become Trump’s “sock puppet,” Waller flatly denied it, saying that if confirmed, he would lead the Federal Reserve as an independent actor.

However, Democratic lawmakers were not so easily convinced. Senator Ruben Gallego sharply pointed out that the Wall Street Journal previously reported Trump had pressed Waller on whether he could be trusted to support rate cuts during a 45-minute meeting at the White House, and that Trump himself later confirmed the report to the paper. Gallego said bluntly: “Someone here is lying—either you or President Trump.” In response, Waller said the reporter “either needs better sources or higher news standards,” but he admitted that at the time he did not request a correction, nor did he respond to the fact that Trump had personally confirmed the report to the Wall Street Journal.

But on the very morning of the hearing, Trump was even more direct in an interview with CNBC. He acknowledged that if the Federal Reserve led by Waller failed to cut rates, he would “feel disappointed,” and he also said he did not plan to pressure the Department of Justice to end its investigation of Powell. Those remarks undoubtedly added another layer of political tension to the hearing.

The most aggressive attack came from Elizabeth Warren, the top Democratic member of the Senate Banking Committee. In her opening remarks, she directly accused Waller of being “unfit to serve as the chair of the Federal Reserve,” and criticized Trump for trying to dismantle the safeguards of the Fed’s independence, with the aim of having monetary policy serve short-term economic prosperity ahead of the midterm elections. Warren also tested Waller with the results of the 2020 election—(Trump has long insisted that the 2020 election was “rigged”)—and asked, “Did Trump lose the 2020 election?” But Waller consistently refused to state “Trump lost” directly, brushing it off by saying the election outcome had already been “certified,” attempting to separate a political issue from the responsibilities of the Federal Reserve.

As for policy positions, Waller characterized the current inflation dilemma as the Fed’s “fatal policy mistake,” pointing out that after the pandemic, prices rose across the board by 25% to 35%, which means the Fed is seriously off track. He called for “regime change,” including establishing a new inflation framework, reforming the way communication is handled, and tackling inflation with both interest rates and the balance sheet. However, he clarified that the so-called regime change refers to “changes in the policy regime,” not personnel purges, and he said he would not fire the presidents of the regional Federal Reserve banks.

At the same time, Waller expressed dissatisfaction with the practice of Fed officials issuing predictions about the direction of interest rates in advance, saying, “Too many Fed officials make comments ahead of time about the direction of the interest rates for the next meeting, the next quarter, and even next year. I think that’s quite unhelpful.” He said he would rather hold “robust and vigorous internal debate” during policy meetings instead of following a rehearsed script. Notably, Waller did not commit to continuing the current practice of holding press conferences after every FOMC meeting, which suggests the Fed’s future policy transparency may undergo subtle changes.

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

However, the hearing also revealed signs that some Democratic lawmakers might be willing to support Waller. After Waller discussed revisiting how inflation is measured, Senator Catherine Cortez Masto gave a positive response, saying, “I hope you’re right,” and adding that she respects his theoretical beliefs as an economist. Senator Mark Warner did not attend the hearing due to a family bereavement, and he is also seen as a potential supporting vote.

What does it mean for the crypto market?

For the crypto market, the significance of this hearing lies not only in the future path of interest rates and dollar liquidity, but also in how the Federal Reserve and the banking regulatory system will respond as crypto capital becomes embedded even more deeply into traditional finance.

Notably, at the hearing, although Waller repeatedly emphasized that monetary policy must remain independent, he was unwilling to apply the same standard to banking policy and the regulatory sphere. That prompted Warren’s intense questioning: given that the Trump family has already extended into the institutional system through crypto financial businesses such as World Liberty Financial, and even applied for banking licenses, in the future—if issues involve the discount window, bank entry, or regulatory discretion—could the Federal Reserve face direct pressure from the Trump family’s business interests?

Previously, Waller also explicitly proposed drastically reducing the Federal Reserve’s balance sheet of $6.7 trillion, but so far he has not disclosed a specific execution plan. Multiple officials and scholars have warned him not to be overly aggressive or act too hastily. The pace and scale of balance sheet reduction will directly affect market liquidity, which is one of the core variables in how crypto assets are priced.

In addition, Waller himself has a broad investment portfolio in the digital assets space. According to his regulatory filing documents, Waller’s investment portfolio includes equity in multiple companies in the decentralized finance sector, including projects such as Solana, Lemon Cash, and Flashnet, as well as other funds with crypto-asset exposure. Under Federal Reserve transaction rules, officials are not allowed to hold large positions in cryptocurrencies; therefore, if Waller formally takes office, these holdings would need to be divested.

It can be inferred that a Federal Reserve chair who has deep involvement in the crypto industry—regardless of whether his tenure will directly affect digital asset regulation—at least signals that the decision-making leadership is not unfamiliar with this emerging asset class. Combined with Waller’s policy inclination toward de-regulation and his ambition to reshape the Fed’s economic model and communications framework, the crypto market has reason for cautious optimism toward this potential new chair.

Finally, although this hearing appears on the surface to focus on Federal Reserve independence, in reality it is a direct confrontation over the boundaries of power among the White House, Congress, and the central bank. At the hearing, Waller demonstrated highly tactical tactics typical of a politician: he did not openly take a stance against Trump, and he sought to calm markets by repeatedly emphasizing independent decision-making. But by avoiding details about the 2020 election results and refusing to commit to maintaining the same frequency of press conferences, he leaves ambiguous room within his “independence” pledge.

With multiple senators blocking him, whether Waller can be formally appointed before Powell’s term expires on May 15 depends on the direction of the Department of Justice investigation, and Trump has already made clear that he has no intention of backing down. No matter how the final timeline unfolds, the policy direction represented by Waller is already clear: a new era of the Federal Reserve—one more inclined to pave the way for rate cuts with a productivity narrative, drive the central bank to “thin out,” and advance institutional reforms—is taking shape. For the crypto market, the macro-narrative framework for the next four years may see a major turn.