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The U.S. Department of Justice on Friday closed its criminal investigation of Federal Reserve Chair Jerome Powell, referring the underlying cost-overrun question on a Fed building renovation to the Fed's own inspector general. U.S. Attorney for the District of Columbia Jeanine Pirro said the office directed the inspector general to deliver a "comprehensive report in short order," while reserving the right to reopen a criminal probe if facts warrant.
The procedural handoff is more than paperwork. Senator Thom Tillis had publicly conditioned his vote on Kevin Warsh's confirmation on the DOJ dropping the probe, calling it a "bogus investigation" that threatened Fed independence. With that objection removed, the Republican-majority Senate can now move toward confirming Warsh, who appeared at a hearing this week and pledged to act independently of the White House. Powell's term expires May 15.
Why it matters
Kalshi prediction markets reacted immediately: Warsh-confirmation odds before May 15 jumped from roughly 30% to north of 80% within hours of the news. That kind of single-day repricing is the market's clearest read on how the political constraint just shifted.
The installation matters for crypto because the Fed board writes and implements the rules that govern stablecoin issuers, bank custody of digital assets, and the supervisory perimeter around payment-system stablecoins. Replacing the Powell-led board with a Trump-aligned chair gives the administration more direct influence over those rulemakings — and over how aggressively the Fed pushes back on, or accommodates, the growing dollar-tokenisation stack.
Market impact
Senator Elizabeth Warren, the ranking Democrat on the Senate Banking Committee, called the move an attempt to install a "sock pocket" Fed chair and noted the DOJ is still pursuing Fed Governor Lisa Cook in court, signalling the institutional fight continues even as the Powell front clears. Warsh's own disclosed wealth includes crypto-adjacent assets, a fact Democrats flagged at the hearing.
Frequently asked questions
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Why did the DOJ close its investigation of Jerome Powell?
U.S. Attorney Jeanine Pirro closed the criminal probe on Friday and referred the underlying cost-overrun question on a Fed building renovation to the Fed's own inspector general, while reserving the right to reopen a criminal case if the facts warrant.
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How does the DOJ move affect Kevin Warsh's Fed chair confirmation?
Senator Thom Tillis had conditioned his vote on the DOJ dropping the case, calling it a "bogus investigation" that threatened Fed independence. With the probe closed, the Republican-majority Senate can now move toward confirming Warsh before Powell's term expires May 15.
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How did prediction markets react to the DOJ dropping the Powell probe?
Kalshi's Warsh-confirmation odds before May 15 jumped from roughly 30% to north of 80% within hours of the news, the sharpest single-day repricing of the confirmation path since Warsh's nomination.
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Why does a new Fed chair matter for crypto and stablecoins?
The Fed board writes and implements rules governing stablecoin issuers, bank custody of digital assets, and the supervisory perimeter around payment-system stablecoins. A Trump-aligned chair tightens White House influence over those rulemakings and over how the Fed treats the growing dollar-tokenisation stack.
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Did the DOJ drop its other cases against Fed officials?
No. Senator Elizabeth Warren noted the DOJ is still pursuing Fed Governor Lisa Cook in court, signalling the institutional fight over Fed independence continues even as the Powell front has cleared.
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