Will the Federal Reserve welcome a crypto industry leader? With Worsh returning to the board, what impact will it have on Bitcoin?

The Senate approved Kevin Warsh as a Federal Reserve Board member, and he will take over as chair. Warsh sees 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

In May 2026, the U.S. political scene and financial sector are set for a major turning point. On Tuesday, the U.S. Senate formally confirmed Kevin Warsh as a member of the Federal Reserve (Fed) Board with a vote of 51 to 45. This development clears the final hurdle for him to succeed current chair Jerome Powell.

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

Warsh’s term on the Board will last 14 years, running from February 2026 to 2040. In this highly partisan vote, Republicans supported him in full thanks to their majority advantage, while among Democrats only Pennsylvania Senator John Fetterman voted in favor—breaking the tradition that Fed chair nominations usually come with cross-party consensus.

With Powell’s four-year chair term set to end this Friday, the Senate is expected to hold an independent confirmation vote for Warsh to become chair on Wednesday immediately afterward. Based on the current arrangement by Senate Majority Leader John Thune, Warsh has an extremely high chance of being confirmed. Although Powell is about to step down as chair, he has stated that he will remain on the Board until 2028. His consideration is to maintain the organization’s stability and independence until the Justice Department’s investigation into the Fed’s headquarters renovation concludes. This rare situation of “two generations of chairs serving at the same time” adds complex political variables to the implementation of U.S. monetary policy in the future.

Crypto assets draw focus; Warsh sees Bitcoin as a policy alarm

Unlike past Fed officials who were skeptical about digital assets, Warsh’s deep ties to the cryptocurrency industry have made the market pay close attention. According to his financial disclosure report submitted to the Office of Government Ethics, Warsh holds a massive portfolio worth more than 1 hundred million, with multiple Web3-related investments included in his asset holdings.

These include the prediction market platform Polymarket, blockchain infrastructure company Tenderly, and the Bitcoin payment startup Flashnet. In addition, he holds equity stakes related to digital asset management firm Bitwise and the stablecoin project Basis. Warsh has pledged to divest these assets after officially taking office, but his open stance toward cryptocurrencies has long been an established fact.

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Warsh has previously said publicly that Bitcoin ($BTC) is a transformative technology—he even described 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 hearing of the Senate Banking Committee, he emphasized that cryptocurrencies have already penetrated the structure of the U.S. financial system. They are part of the overall financial services industry, not merely marginal speculative tools.

Rate-cut expectations collapse; inflation shadows and a hawkish return hit the market

Although President Trump has continued to pressure the Fed to cut rates sharply to stimulate the economy, Warsh’s rise has instead cooled the market’s expectations for easing policies. Known for his hawkish image focused on inflation risks, Warsh reiterated at recent hearings that he will maintain the Fed’s independence, but he also expressed concerns about the rapidly expanding balance sheet and an overly accommodative interest-rate environment.

As a result, the CME’s FedWatch tool shows traders have already significantly scaled back their expectations for rate cuts in 2026 and 2027. The market currently forecasts that interest rates will remain in the 3.5% to 3.75% range, with only 2.9% of forecasts believing that rate cuts will occur.

Image source: CME FedWatch The market currently predicts that interest rates will remain 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. Consumer Price Index (CPI) for April rose to 3.8% year over year, above the market expectation of 3.7%, setting a new three-year high. Coupled with tensions between the U.S. and Iran that keep oil prices elevated, the risk of a long-term closure of the Strait of Hormuz is ringing alarm bells for energy inflation.

Under this overall economic pressure, both Bitcoin and gold gave back their gains. After the news broke, Bitcoin fell by more than 1.5%, dropping below 80,900 from a single-day high of 82,098, before quickly retreating. Gold and silver also declined by 0.7% and 2%, respectively—reflecting investors’ fears that a high-interest-rate environment will persist for the long term.

Regulatory bill heads into a critical stage; Web3’s future under Warsh’s term

Warsh’s term comes at an important juncture for U.S. cryptocurrency regulation. The Senate Banking Committee is expected to review the “CLARITY Act” on digital assets this Thursday. This 309-page draft attempts to divide jurisdiction between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), and includes amended provisions regarding a ban on stablecoin yield.

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Although the bill faces significant opposition from labor organizations and the traditional banking industry, the market generally believes that a Fed chair who has deep knowledge of crypto will help accelerate the research and implementation of the stablecoin regulatory framework and digital payment systems.

Warsh will face the severe challenge of striking a balance between political pressure and economic stability. Ray Dalio, founder of Bridgewater Associates, recently pointed out that due to a lack of privacy, Bitcoin still cannot fully play the core role of a safe-haven asset, and central banks are unlikely to hold large amounts of it in the short term.

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However, Warsh believes that AI-driven productivity improvements can offset inflationary pressures, and this viewpoint may become a new rationale for his future interest-rate policy. As Warsh officially moves into the Fed, global financial markets are holding their breath to see how this new crypto-minded leader will reshape the dollar’s status and the future direction of monetary policy.