DOJ ends investigation into Powell, odds of Walsh taking office soar to 84%: Crypto-friendly Fed Chair emerges

The U.S. Department of Justice officially concluded its criminal investigation into Fed Chair Powell on April 24. Prediction markets saw the probability of Warsh’s confirmation surge from 30% to 84%. This nominee, who holds various crypto assets including Solana, Polymarket, and dYdX, is now just one procedural step away from taking the helm at the Fed. (Previous coverage: Rumors suggest the U.S. Department of Justice may drop the case against Fed Chair Powell as early as Friday; a judge previously slammed the move as "political harassment" to pressure interest rate cuts.) (Background: Will Warsh push capital toward Bitcoin? Gold fell below $5,000 and BTC rebounded to $83,700 following Trump's nomination.) With the criminal investigation into incumbent Fed Chair Jerome Powell terminated, North Carolina Republican Senator Thom Tillis immediately withdrew his opposition on April 26, breaking the deadlock. On the Kalshi prediction market, the probability of Warsh being confirmed before Powell’s term ends on May 15 jumped from approximately 30% to 84%; Polymarket users estimated the probability at 77%. The legal bomb that had blocked Kevin Warsh from the Fed for nearly three months was quietly defused on the evening of April 24. The U.S. Department of Justice announced that the investigation was triggered by an over-budget renovation project at the Fed’s Washington headquarters. The original budget of $1.9 billion ballooned to $2.5 billion due to rising material and labor costs, additional asbestos removal, and foundation subsidence discovered during construction. While the Fed’s internal Inspector General found no wrongdoing, the Department of Justice launched a criminal investigation early this year under the direction of the Trump administration. In March, a federal judge publicly criticized the investigation as nothing more than "political harassment by Trump to pressure the Fed into cutting interest rates," a statement that drew widespread attention due to its harsh tone. Tillis, who chairs the Senate Banking Committee, took a different stance, explicitly declaring that he would not allow a confirmation vote for Warsh until the investigation was closed—a move viewed by outsiders as an internal power struggle between the White House and Senate Republicans. After the Department of Justice announced the case closure, the lead U.S. Attorney, Jeanine Pirro, posted on X: "If the facts require it, I will not hesitate to reopen the criminal investigation." White House spokesperson Kush Desai stated that the administration is confident in the Senate’s ability to "swiftly confirm Kevin Warsh as the next Fed Chair and restore the Fed’s decision-making capacity and credibility." Decrypt quoted an unnamed Republican senator as saying, "Tillis won." The 56-year-old Kevin Warsh is no stranger to the crypto circle. He served as a member of the Federal Reserve Board of Governors from 2006 to 2011 before teaching at Stanford University, and was nominated by Trump in January to succeed Powell. The news of his nomination initially caused BTC to drop 3% in the short term, as the market misread his hawkish monetary policy stance as a bearish signal. However, Warsh explicitly stated during his hearing that he considers the Fed’s monetary expansion during the pandemic to be "the greatest policy error in 40 to 50 years," advocating for a return to tightening and maintaining higher real interest rates. Yet, on crypto issues, his attitude is unexpectedly open. During his confirmation hearing, Warsh disclosed holdings in several crypto assets, including Solana, Polymarket, dYdX, Polychain Capital, Dapper Labs, and Optimism. He told senators that "digital assets are already part of the U.S. financial services industry" and explicitly opposed the Fed issuing a CBDC, calling it "terrible policy." He further suggested that those under 40 should view Bitcoin as "new gold" and believes Bitcoin could act as an external monitor for monetary policy. At the confirmation hearing on April 22, he also denied being a "puppet" for Trump, stating he had never signed any secret agreements with the White House regarding interest rate paths. The strongest opposition came from Democratic Senator Elizabeth Warren. During the Banking Committee hearing, she called Warsh a "sock puppet" for Trump, warning that having a puppet in charge of the Fed would allow the President to use the Fed’s powerful tools to "line his own pockets, enrich his family’s crypto companies, or bail out his friends on Wall Street when they fall into crisis." The crypto asset portfolio held by Warsh, and his potential conflicts of interest with the Trump family, were the exact points Warren targeted. This line of questioning is expected to continue as the committee vote approaches. For the crypto market, Warsh’s succession means that for the first time, the highest level of the Fed will be led by a