Will the Federal Reserve be set to welcome a crypto-focused leader? Wozniak returns to the board—what impact will it have on Bitcoin?

The Senate confirms Kevin Warsh's appointment to the Federal Reserve Board, and he will assume the chairmanship. Warsh views Bitcoin as a policy alarm, and his hawkish stance has cooled expectations for rate cuts. The market is closely watching.

The Senate votes to confirm the appointment, and Warsh is about to take control of the Federal Reserve

Major turning point in U.S. politics and finance in May 2026. On Tuesday, the U.S. Senate officially confirmed Kevin Warsh as a member of the Federal Reserve Board with a vote of 51 to 45, paving the final way for him to succeed current Chair Jerome Powell.

Image source: U.S. Senate The U.S. Senate officially confirmed Kevin Warsh as a member of the Federal Reserve Board with a 51-45 vote on Tuesday

Warsh’s term will last 14 years, from February 2026 to 2040. In this highly partisan vote, Republicans supported him entirely with a majority advantage, while among Democrats, only Pennsylvania Senator John Fetterman voted in favor, breaking the traditional bipartisan consensus usually seen in Fed chair nominations.

As Powell’s four-year term as chair is set to expire this Friday, the Senate is expected to hold an independent confirmation vote for Warsh on Wednesday. According to current Senate Majority Leader John Thune’s layout, Warsh’s confirmation chances are very high. Although Powell is about to step down as chair, he has stated he will remain on the Board until 2028, aiming to maintain organizational stability and independence until the Justice Department’s investigation into the Fed headquarters renovation concludes. This rare “two-generation chair” scenario adds complex political variables to the future implementation of U.S. monetary policy.

Cryptocurrency background becomes a focus, Warsh sees Bitcoin as a policy alarm

Unlike previous Fed officials who held skeptical attitudes toward digital assets, Warsh’s deep ties to the cryptocurrency industry have drawn market attention. According to his financial disclosure report submitted to the government ethics office, Warsh holds assets worth over $100 million, including investments related to Web3.

These include prediction market platform Polymarket, blockchain infrastructure company Tenderly, and Bitcoin payment startup Flashnet. Additionally, he owns stakes in digital asset management firm Bitwise and the stablecoin project Basis. Warsh has committed to divesting these assets after officially taking office, but his open attitude toward cryptocurrencies has long been undeniable.

• Related news: Revealing crypto holdings! Fed Chair candidate Kevin Warsh’s blockchain and DeFi layout disclosed

Warsh has publicly stated that Bitcoin ($BTC) is a transformative technology, even describing it as “an excellent policeman for financial policy.”

He believes Bitcoin’s price volatility can reflect market confidence in the Fed’s handling of inflation and monetary credibility.

At a Senate Banking Committee hearing, he emphasized that cryptocurrencies have penetrated the structure of the U.S. financial system; they are part of the overall financial services industry, not just fringe speculative tools.

Expectations for rate cuts collapse, inflation shadows and hawkish return impact the market

Despite President Trump’s continuous pressure on the Fed to cut rates sharply to stimulate the economy, Warsh’s rise has instead brought market expectations for easing to a freezing point. Warsh is known for his hawkish image, focusing on inflation risks during his tenure. In recent hearings, he reiterated the Fed’s independence but also expressed concerns about the rapidly expanding balance sheet and excessively loose interest rate environment.

As a result, CME’s FedWatch tool shows traders have significantly reduced expectations for rate cuts in 2026 and 2027. Currently, the market predicts rates will stay in the 3.5% to 3.75% range, with only a 2.9% chance of a cut.

Image source: CME FedWatch Market expectations currently predict rates will stay in the 3.5% to 3.75% range, with only a 2.9% chance of a cut

Economic data further intensifies this anxiety. The U.S. Consumer Price Index (CPI) for April rose to 3.8% year-over-year, above the market expectation of 3.7%, hitting a three-year high. Coupled with tensions between the U.S. and Iran leading to high oil prices, the risk of long-term Strait of Hormuz closure has triggered alarms for energy inflation.

Under this overall economic pressure, both Bitcoin and gold have retraced gains. Bitcoin’s price dropped over 1.5% following the news, falling below 80,900 from a daily high of 82,098, quickly retreating. Gold and silver also declined by 0.7% and 2%, respectively, reflecting investors’ fears of prolonged high-interest-rate environments.

Regulatory bills face a critical period, Web3 future under Warsh’s term

Warsh’s term coincides with a crucial moment in U.S. cryptocurrency regulation. The Senate Banking Committee is scheduled to review the “Clarity Act” on digital asset markets this Thursday. This 309-page draft aims to delineate jurisdiction between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), including amendments on banning stablecoin yields.

• Related news: 2026 CLARITY Act latest summary: registration exemptions, passive yield on stablecoins, and more

Although the bill faces significant opposition from labor organizations and traditional banking industries, the market generally believes that a Fed chair with deep understanding of crypto technology will help accelerate the research and implementation of stablecoin regulation and digital payment systems.

Warsh will face the tough challenge of balancing political pressure and economic stability. Ray Dalio, founder of Bridgewater Associates, recently pointed out that due to the lack of privacy, Bitcoin currently cannot serve as a core safe-haven asset, and central banks are unlikely to hold large reserves of it in the short term.

• Related news: Dalio: Bitcoin’s hedging ability is inferior to gold, hard to be included in central bank reserves! MicroStrategy strikes back swiftly

However, Warsh believes that AI-driven productivity improvements can offset inflationary pressures, which may become a new basis for his future rate-setting policies. As Warsh officially joins the Fed, global financial markets are holding their breath, watching how this crypto-minded new leader will reshape the dollar’s status and the future direction of monetary policy.