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

Author: Chloe, ChainCatcher

The Federal Reserve nominee, Waller, appeared before the U.S. Senate Banking Committee at 22:00 yesterday for an appointment hearing. This was also Waller’s first public appearance since receiving a Trump nomination earlier this January, during which he publicly set out his views on monetary policy and his vision for central bank governance.

Previously, Waller submitted financial disclosure documents revealing his investment plans in the crypto industry. Waller held equity stakes in dozens of blockchain and digital-asset companies, with his investment reach 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 liquidate the vast majority of his holdings.

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

Hearing highlights compiled: how Waller responds to a string of questions

According to earlier reporting cited by Bloomberg, Trump has made it clear that he wants the incoming chair to lower interest rates. There is no doubt that Waller also has to face a series of questions about the Federal Reserve’s independence, testing whether he can both reassure Washington while also convincing financial markets that his policy direction will be based on truly market-driven needs.

At last night’s hearing, the core question Waller faced was whether he could maintain independence under Trump’s pressure to cut rates. Waller answered clearly: Trump had never asked him to commit to lowering rates at any specific point in time. “The President has never asked me to decide in advance, commit to, or lock in any interest rate decision. He did not ask, and he did not pressure me—and I would never agree to do so.” 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 quick to accept that. Senator Ruben Gallego sharply pointed out that the Wall Street Journal had reported that, during a 45-minute meeting at the White House with Waller, Trump pressed him on whether he could be trusted to support rate cuts—and Trump himself later confirmed the report to the newspaper. Gallego said bluntly: “Someone here is lying—it’s either you or President Trump.” In response, Waller said that the reporter “either needs better sources or higher journalistic standards,” but he acknowledged that he neither requested a correction at the time nor responded to the matter of Trump personally confirming 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, admitting that if the Federal Reserve led by Waller failed to cut rates, he would “feel disappointed.” He also said he does not plan to pressure the Justice Department to end its investigation of Powell. Those remarks undoubtedly added yet another spark to the hearing’s political tension.

The most intense offensive came from Elizabeth Warren, the top Democratic member of the Senate Banking Committee. In her opening remarks, she directly condemned Waller as “not suitable to serve as Federal Reserve chair,” accusing Trump of trying to dismantle the Federal Reserve’s independence safeguards, with the aim of serving monetary policy to short-term economic prosperity ahead of the midterm elections. Warren also tested Waller using the results of the 2020 election (Trump has long insisted that the 2020 election was “rigged”), asking: “Did Trump lose the 2020 election?” But Waller consistently refused to say directly “Trump lost,” instead dismissing it with the election result being “certified,” trying to separate the political issue from the Federal Reserve’s responsibilities.

On policy positions, Waller defined the current inflation predicament as the Federal Reserve’s “deadly policy failure,” pointing out that after the pandemic, prices rose across the board by 25% to 35%, meaning the Federal Reserve was seriously off track. He called for “regime change,” including establishing a new inflation framework, reforming how the Fed communicates, and using both interest rates and the balance sheet to tackle inflation. However, he clarified that the so-called regime change refers to “changes in the policy regime,” not personnel purges—he explicitly said he would not fire the presidents of regional Federal Reserve banks.

Meanwhile, Waller expressed dissatisfaction with the practice of Federal Reserve officials issuing forecasts about the direction of interest rates in advance, saying: “Too many Federal Reserve officials give their views on the direction of interest rates for the next meeting, next quarter, or even next year in advance, and I think that’s quite unhelpful.” He said he prefers to hold “full and vigorous internal debate” in policy meetings rather than act according to a rehearsed script. Notably, Waller did not commit to maintaining the current practice of holding press conferences after every FOMC meeting, which means that future Federal Reserve policy transparency could see subtle changes.

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

Still, the hearing also suggested that some Democratic lawmakers may be willing to support Waller. After Waller discussed re-examining ways to measure inflation, Senator Catherine Cortez Masto responded positively, saying, “I hope you’re right,” and also said she respects his theoretical beliefs as an economist. Senator Mark Warner was absent from the hearing due to a family bereavement, and he was also seen as a potential yes vote.

What does this mean for the crypto market?

For the crypto market, the significance of this hearing is not only about the future interest-rate path and U.S. dollar liquidity, but also about how the Federal Reserve and the banking regulatory system will handle crypto capital becoming embedded even more deeply in traditional finance.

Notably, although Waller repeatedly emphasized at the hearing that monetary policy must remain independent, he was unwilling to apply the same standard to bank policy and the regulatory arena. This drew strong skepticism from Warren: given that Trump’s family has already extended into the institutional crypto finance sector through businesses such as World Liberty Financial, and even applied for banking licenses, in the future, if matters involve the discount window, bank access, or regulatory discretion, could the Federal Reserve face direct pressure from the president’s family’s business interests?

Previously, Waller had also clearly proposed to substantially reduce the Federal Reserve’s $6.7 trillion balance sheet, but so far has not disclosed any specific implementation plan. Multiple officials and scholars have warned him against being overly aggressive or acting too hastily. The pace and scale of balance sheet reduction will directly affect market liquidity—one of the core variables in crypto asset pricing.

In addition, Waller himself has a broad investment layout in the digital-asset space. According to his regulatory disclosure filings, Waller’s investment portfolio includes equity stakes in multiple companies in decentralized finance, including projects such as Solana, Lemon Cash, and Flashnet, as well as other funds with exposure to cryptocurrencies. Under Federal Reserve trading rules, officials are not allowed to hold large cryptocurrency positions, so if Waller formally takes office, these holdings must be liquidated.

It can be inferred that a Federal Reserve chair with 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. Coupled with Waller’s policy inclination toward deregulation, and his ambition to reshape the Federal Reserve’s economic model and communication framework, the crypto market has reason to approach this potential new chair with cautious optimism.

Finally, while this hearing appears on the surface to focus on Federal Reserve independence, in reality it is a direct contest over the boundaries of power among the White House, Congress, and the central bank. At the hearing, Waller displayed tactics typical of a politician: he did not openly contradict Trump, and he also sought to calm the market by repeatedly emphasizing independent decision-making. But by sidestepping details such as the 2020 election results and refusing to commit to maintaining the frequency of press conferences, he also leaves ambiguous space around his “independence” pledge.

With multiple senators blocking the way, whether Waller can be formally confirmed before Powell’s term ends on May 15 depends on where the Justice Department investigation goes, and Trump has already made it clear that he has no intention of backing down. No matter what the final timeline looks like, the policy direction represented by Waller is already clear: a new era for the Federal Reserve—more inclined to pave the way for rate cuts through a productivity narrative, “slimming down” the central bank, and pushing for systemic reform—is taking shape. For the crypto market, the macro narrative framework for the next four years may undergo a major turn.