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

By: Chloe, ChainCatcher

Fed nominee Waller appeared before the U.S. Senate Banking Committee at 22:00 yesterday for a confirmation hearing on his appointment. This was Waller’s first official public appearance since being nominated by Trump in January this year, as he laid out his views on monetary policy and his vision for central bank governance.

Earlier, Waller submitted financial documents disclosing his investment plan in the crypto industry. Waller held equity stakes in dozens of blockchain and digital-asset companies, with investments spanning DeFi lending, decentralized derivatives, Layer 1 and Layer 2 networks, prediction markets, and even Bitcoin payment infrastructure. Now, to comply with government ethics rules, he has pledged to sell off the vast majority of his holdings.

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

Key focus of the hearing: How Waller will respond to a series of questions

According to a previous report from Bloomberg, Trump has made it clear that he hopes the new chair will lower interest rates. Waller will undoubtedly face a series of questions about the Federal Reserve’s independence—testing whether he can both reassure Washington and convince financial markets that his policy path will be based on genuine market needs.

At last night’s hearing, the central question Waller faced was: whether he can maintain independence under Trump’s pressure to cut rates. Waller responded clearly, saying Trump had never asked him to commit to cutting rates at any specific point in time. “The president has never asked me to pre-decide, promise, or lock in any interest-rate decision. He has not asked me, nor pressured me, and I would never agree to do so.” When asked whether he would become Trump’s “sock puppet,” Waller denied it outright, saying that if confirmed, he would lead the Fed as an independent actor.

However, Democratic lawmakers were not so easily persuaded. Senator Ruben Gallego sharply pointed out that The Wall Street Journal had reported Trump asked whether he could trust Waller to support rate cuts during a 45-minute meeting at the White House with Waller, and that Trump himself later confirmed the report to the outlet. Gallego said bluntly, “Someone here is lying—either you or President Trump.” Waller responded that the reporter “either needs better sources or higher journalistic standards,” but he admitted that he did not request a correction at the time and did not respond to Trump confirming the report directly to The Wall Street Journal.

But just the morning of the hearing, Trump went further in comments during an interview with CNBC. He admitted that if the Fed led by Waller failed to cut rates, he would “feel disappointed,” and he also said he does not plan to pressure the Department of Justice to end its investigation into Powell. Those remarks undoubtedly added another spark to the political tension surrounding the hearing.

The most forceful attack came from Elizabeth Warren, the top Democratic lawmaker on the Senate Banking Committee. In her opening statement, she directly charged that Waller was “unsuitable” to serve as Fed chair, accusing Trump of attempting to dismantle the Fed’s independence safeguards, with the goal of making monetary policy serve short-term economic prosperity ahead of the midterm elections. Warren also tested Waller with the outcome of the 2020 election (Trump has long insisted that the 2020 election was “rigged”), asking: “Did Trump lose the 2020 election?” Waller, however, never wanted to say directly that “Trump lost.” He instead brushed it off by noting that the election result had been “certified,” trying to separate political issues from the Fed’s responsibilities.

On policy proposals, Waller framed the current inflation predicament as a “deadly policy failure” by the Fed, pointing out that after the pandemic prices rose across the board by 25% to 35%, which means the Fed is seriously off target. He called for “regime change,” including building a new inflation framework, reforming how the Fed communicates, and tackling inflation with both interest rates and the balance sheet. However, he clarified that “regime change” refers to “a change in policy framework,” not personnel purges, and he explicitly said he would not fire the presidents of regional Federal Reserve banks.

Meanwhile, Waller expressed dissatisfaction with the practice of Fed officials forecasting the direction of interest rates in advance, saying, “Too many Fed officials comment ahead of the next meeting, next quarter, or even next year’s interest rate direction—I think that’s quite unhelpful.” He prefers “sufficient and intense internal debate” during policy meetings rather than following a rehearsed script. It is also worth noting that Waller did not commit to continuing the current practice of holding press conferences after every FOMC meeting, meaning that the Fed’s future policy transparency may change subtly.

As for the timeline, Republican Senator Thom Tillis, though he clearly stated his support for Waller to serve as chair, still insisted that he would not allow the nomination to move forward until the Department of Justice’s investigation into Powell ends. He urged during the hearing: “Let’s end this investigation so that I can support your confirmation.”

However, the hearing also showed signs that some Democratic lawmakers may support Waller. After Waller discussed the idea of re-examining how inflation is measured, Senator Catherine Cortez Masto responded positively, saying, “I hope you’re right,” and added that she respects his theoretical beliefs as an economist. Senator Mark Warner was absent due to a family bereavement, and he is also viewed as a potential supporting vote.

What does this mean for the crypto market?

For the crypto market, the significance of this hearing lies not only in the future path of interest rates and dollar liquidity, but also in how the Fed and the banking regulatory system will handle the deeper embedding of crypto capital into traditional finance.

Notably, even though Waller repeatedly emphasized at the hearing that monetary policy must remain independent, he was unwilling to extend the same standard to the areas of bank policy and supervision. This drew intense scrutiny from Warren: given that the Trump family has already extended into the institutional framework through crypto financial businesses such as World Liberty Financial, and even applied for bank licenses, could the Fed in the future face direct pressure from the president’s family’s commercial interests if there are matters involving the discount window, bank entry, or regulatory discretion?

Previously, Waller had also explicitly proposed drastically cutting the Fed’s $6.7 trillion balance sheet, but he has not yet disclosed the specific implementation plan to date. Multiple officials and scholars have warned him not to be too aggressive or to move too hastily. The pace and scale of balance-sheet reduction will directly affect market liquidity—one of the core variables in the pricing of crypto assets.

In addition, Waller himself has extensive investment exposure in the digital-asset space. According to his regulatory filing documents, his investment portfolio includes equity stakes in multiple companies in the decentralized finance space, including projects such as Solana, Lemon Cash, and Flashnet, as well as other funds with exposure to cryptocurrencies. Under Fed trading rules, officials are not allowed to hold large crypto positions; therefore, if Waller formally takes office, these holdings would need to be divested.

It is reasonable to infer that a Fed chair deeply involved in the crypto industry, regardless of whether his term would directly affect digital-asset regulation, at least signals that the policy leadership is not unfamiliar with this emerging asset class. Combined with Waller’s policy inclination toward deregulation and his ambition to reshape the Fed’s economic model and communication framework, the crypto market has reason to hold cautious optimism about this potential new chair.

Finally, although this hearing ostensibly focused on Fed independence, in reality it was a direct contest over the boundaries of power between the White House, Congress, and the central bank. In the hearing, Waller displayed tactics typically seen in politicians: he did not openly oppose Trump, and he sought to reassure markets by repeatedly emphasizing independent decision-making. But by evading details about the 2020 election results and refusing to commit to maintaining press-conference frequency, he left ambiguous space for his “independence” promise.

With opposition from multiple senators, whether Waller can be formally confirmed before Powell’s term ends on May 15 depends on the direction of the Department of Justice’s investigation—and Trump has already made clear that he has no intention of backing down. No matter how the timeline turns out, Waller’s represented policy direction is already clear: a new era for the Fed is brewing—one that is more inclined to pave the way for rate cuts through a productivity narrative, push the central bank to “thin out,” and drive systemic reforms. For the crypto market, the macro narrative framework over the next four years may see a major turn.