The Trump administration is considering 11 candidates for the chair of the Federal Reserve as Jerome Powell's term ends in May. At least three of them have previously shown a positive attitude towards cryptocurrencies.
Treasury Secretary Scott Bessent said on Wednesday on Fox News that they have 11 'very strong candidates' for the head position #ФРС , whom he will start to vet and select from next month.
The list of candidates, according to CNBC on August 13 citing two administration representatives, includes Dallas Fed President Lorie Logan, former St. Louis Fed President James Bullard, Fed Vice Chairman Philip Jefferson, and Fed Governor Chris Waller.
The list also includes Fed Vice Chairman for Supervision Michelle Bowman, former Fed Governor Larry Lindsey, economic advisor to the Bush administration Marc Sumerlin, Jefferies investment bank executive David Zervos, and BlackRock's Chief Investment Officer for Global Bonds Rick Rieder.
The Federal Reserve sets interest rates in the U.S., which affects investor behavior. Lowering rates increases liquidity and typically stimulates bets on volatile risk assets like cryptocurrencies, while raising rates makes investors shed risky positions.
Connections to the crypto industry
Jefferies investment bank, whose chief strategist is Zervos, has connections with cryptocurrency projects. The bank has supported the public debuts of trading platform eToro, stablecoin issuer Circle Internet Group, cryptocurrency exchange Bullish, and crypto lender Figure Technology Solutions.
Jefferies was also one of the first to bet on Michael Saylor's ambitions to buy Bitcoin through Strategy and reportedly has established the position of senior banker exclusively working with crypto projects for at least five years.
Rieder from BlackRock has made positive statements about cryptocurrencies. In early 2024, he told The Wall Street Journal that Bitcoin could 'become a big part of the asset allocation framework' and that 'over time, people are getting more accustomed to it.'
In November 2020, Rieder stated to CNBC that he believes cryptocurrencies and Bitcoin are phenomena that 'will stay with us,' and that 'the susceptibility — particularly the susceptibility of millennials — to technologies and cryptocurrencies is real.' BlackRock manages the largest Bitcoin and Ethereum exchange-traded funds in the market.
Among the candidates are Waller and Bowman from the Fed, who recently demonstrated a friendly approach to cryptocurrencies.
Bowman, the chief Fed regulator, stated on August 20 that central bank employees should be allowed to invest small amounts in cryptocurrencies to help them understand the technology. According to her, this will help gain 'practical understanding of the underlying functionality.'
Fed Governor Waller said the next day that the banking sector has 'nothing to fear' from crypto payments operating outside the traditional banking system, as this is 'just a new technology for transferring objects and recording transactions.'
By comparison, Powell has addressed the topic of cryptocurrencies several times and usually urged caution. In June, he noted that cryptocurrencies have become more popular, and he expects an increase in banks' participation in this sector. In December, he stated that Bitcoin is more of a competitor to gold than to the U.S. dollar.
Powell's term as chair ends in May, but his 14-year term on the Fed board runs until early 2028. His long-awaited speech on Friday raised hopes for a rate cut — financial markets expect the Fed to lower rates at the meeting in mid-September.
