Will the Federal Reserve welcome a leader from the crypto world? Wozniak returns to the board—what impact does 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.

Senate votes to confirm the appointment, Warsh is about to take control of the Fed

Major turning point in U.S. politics and finance in May 2026. The U.S. Senate on Tuesday 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 the current layout by Senate Majority Leader John Thune, 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’s 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 focus, Warsh sees Bitcoin as a policy alarm

Unlike past Fed officials who were skeptical of digital assets, Warsh’s deep ties to the crypto industry have drawn market attention. According to his financial disclosure report submitted to the Office of Government Ethics, 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 pledged to divest these assets upon taking office, but his open attitude toward cryptocurrencies has long been evident.

• Related news: Revealed 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 shadow and hawkish return impact markets

Despite President Trump’s pressure on the Fed to cut rates sharply to stimulate the economy, Warsh’s rise has instead cooled market expectations for easing policies. Known for his hawkish stance focused on inflation risks during his board tenure, he reiterated at recent hearings that he would maintain Fed independence but also expressed concerns about the rapidly expanding balance sheet and overly accommodative 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 rate cuts.

Image source: CME FedWatch Market currently predicts rates will stay in the 3.5% to 3.75% range, with only a 2.9% chance of rate cuts.

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

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 bill at a critical juncture, future of Web3 under Warsh’s term

Warsh’s term coincides with a critical moment in U.S. cryptocurrency regulation. The Senate Banking Committee is scheduled to review the “Clarity Act” on digital assets this Thursday. This 309-page draft aims to delineate jurisdiction between the SEC and CFTC and includes amendments 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 unions and traditional banking industries, the market generally believes that a Fed chair with deep crypto knowledge will help accelerate the development 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 a 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.

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