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▲ U.S. Federal Reserve (Fed), Cryptocurrency/AI Generated Image
For the first time in the Federal Reserve's 113-year history, an individual who directly holds a large amount of cryptocurrency assets has been tapped as the next chairman, accelerating the integration of virtual assets into the institutional system. At the same time, attention is focused on the impact that powerful hawkish tightening policies will have on the market.
The cryptocurrency-specialized YouTube channel Coin Bureau reported in a video released on May 10 (local time) that Kevin Warsh, the nominated next chairman of the Federal Reserve (Fed), holds personal assets ranging from $135 million to $226 million, a significant portion of which consists of a virtual asset portfolio.
According to financial disclosures submitted by Warsh to the Office of Government Ethics, his portfolio includes over 30 virtual asset-related positions, such as Solana (SOL), the decentralized finance protocol Compound, a stake in the derivatives exchange DYDX, and the prediction market platform Polymarket. Notably, he was also found to hold a stake in Bitwise Asset Management, which operates a Bitcoin spot ETF, showing a clear difference from previous chairmen.
Unlike previous Federal Reserve chairmen who were either hostile to virtual assets or had no exposure to them, Warsh is the first chairman whose personal asset structure is more closely tied to the Bitcoin (BTC) yield curve than to Treasury bonds. Paul Volcker, who curbed inflation, held $2 million in assets primarily in Treasury bonds, and current chairman Jerome Powell concentrated his $35 million in assets in index funds and real estate, drawing a line by legally prohibiting cryptocurrency ownership. Warsh's spouse, Jane Lauder, heiress to Estee Lauder, holds a net worth of approximately $1.9 billion, giving the Federal Reserve under Warsh's system a financial background of a different dimension than before.
At his confirmation hearing in April, Warsh emphasized that digital assets are already a part of the financial services industry and clearly opposed enforcement-centric policies by regulators. He announced that he would sell all virtual asset positions by May 15, before his term begins, to avoid conflicts of interest. However, Democratic Senator Elizabeth Warren expressed concern, pointing out the loophole of blind trusts that could obscure indirect holdings through private equity funds. Nevertheless, the industry expects Warsh's decades of technical understanding and conviction to have a substantial impact on policy-making even after the asset sale.
While Warsh's emergence signifies the structural legitimization of virtual assets, there is also a paradox: his strong hawkish monetary philosophy could be detrimental to the market. Warsh has previously criticized quantitative easing as an "inverse Robin Hood" policy and has consistently pointed out the Federal Reserve's bloated $6.7 trillion balance sheet. With the 10-year Treasury yield currently at 4.45%, aggressive quantitative tightening led by Warsh is highly likely to create an environment that historically destroys the value of risk assets like Bitcoin.
The Federal Open Market Committee meetings on June 16 and 17, held under Chairman Warsh's leadership, are expected to be a significant turning point that will determine the direction of monetary policy for the next four years. With BlackRock's IBIT already holding 86,000 BTC, accounting for 3.8% of the total supply, an unprecedented experiment has begun where a policymaker's asset portfolio directly interacts with the virtual asset ecosystem.
*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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