Why the Next Fed Chair Is Critical to the Crypto Industry
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Why the Next Fed Chair Is Critical to the Crypto Industry
As the top decision-maker on U.S. monetary policy, the Federal Reserve Chair’s stance directly determines market funding costs and liquidity.
Navigating Web3 tides with focused insightsBy Bruce
As the Trump administration prepares its new cabinet, the nomination for Federal Reserve Chair has entered its final stage. Kevin Hassett—the current frontrunner—is not only a key economic advisor to Trump but also a long-standing crypto “enthusiast” with deep ties to the industry.
Direct Impact of Monetary Policy: Liquidity and Asset Prices
As the top decision-maker on U.S. monetary policy, the Fed Chair directly shapes market funding costs and liquidity.
- Hassett’s inclination: Markets widely expect that, if appointed, he would pursue a more aggressive rate-cutting policy.
- Bullish for crypto: A loose monetary environment (low interest rates) typically supports price appreciation for risk assets like $BTC. Indeed, upon news of his rising candidacy, U.S. Treasury yields declined—reflecting market expectations of improved liquidity.
De Facto Authority over Stablecoin Regulation
Under the GENIUS Act, advanced in 2025, the Federal Reserve will play a central role in the stablecoin regulatory framework.
- Primary supervisor: The Fed will directly oversee stablecoin issuers, establishing rules governing how “on-chain dollars” interact with the traditional financial system.
- Treasury market linkage: As stablecoin issuance expands, stablecoins—as major buyers of U.S. Treasuries—will become increasingly intertwined with the Treasury market. The Fed’s stance will determine whether stablecoins can scale smoothly, thereby influencing whether hundreds of billions of dollars can flow seamlessly into the crypto market.
The “Gatekeeper” Between Traditional Finance and Crypto
The Federal Reserve determines how open the banking system is to the crypto industry.
- Compliant access: Whether banks and non-bank financial institutions can legally provide services to crypto firms or participate in stablecoin-related activities hinges entirely on green lights from the Fed and related regulators.
- Industry integration: The next Chair’s stance will decide whether the crypto industry remains an “independent ecosystem” or achieves foundational integration into mainstream finance—enabling broader institutional adoption.
Who Is Kevin Hassett?
Currently the leading candidate (with odds briefly exceeding 50% on @Polymarket), Hassett’s connection to the crypto industry is exceptional:
- Insider background: He holds Coinbase stock valued in the millions of dollars and previously served on Coinbase’s Academic & Regulatory Advisory Council.
- Policy positions: He participated in the White House Digital Assets Working Group and advocated for regulatory frameworks that preserve space for innovation—viewing crypto technology as a critical variable shaping the future economic structure.
Unlike the SEC Chair—who influences the industry primarily through enforcement actions—the Fed Chair fundamentally shapes the crypto industry’s operating environment via the “spigot” of capital (interest rates) and the “gate” of the banking system (access regulation).
If a candidate like Hassett—who combines deep domain expertise with a pro-crypto stance—were to assume office, it could pave the way for crypto to transition from a “fringe asset” to a core component of “mainstream finance.”
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@BruceBlue
