Kevin Warsh, President Trump's nominee to chair the Federal Reserve, told a Senate confirmation hearing Thursday that digital assets are already part of the fabric of US financial services and that a central bank digital currency would be a bad policy choice the Fed has no legal right to issue. Pressed by Senator Warren on whether he would be the president's "human sock puppet," Warsh said "absolutely not"; pressed on whether he would explore a Fed CBDC under his chairmanship, he answered "if it's within the power of the chairman of the Federal Reserve, I agree with that statement."
In a separate Senate hearing, a four-star admiral testified that Bitcoin is "a reality" and a "valuable computer science tool as a power projection" asset, citing proof-of-work and uncensorable value transfer as cyber-security and national-security levers against China, whose main monetary think tank has already published research on Bitcoin as a strategic asset.
Why it matters
Warsh's CBDC refusal keeps the stablecoin franchise — currently dominated by USDC from Circle and USDT issuance running heavily on Ethereum and Solana — in private-sector hands rather than handing it to the Fed. Stablecoin issuers and the L1s hosting their liquidity benefit directly when the policy floor under private dollar tokens is reinforced from the chair's own mouth.
On rates, Warsh declined to pre-commit but framed interest rates as "the much better way" to conduct monetary policy than bond and mortgage purchases, criticised FOMC officials who opine in advance, and said he favours "messier meetings" over rehearsed scripts. Treasury Secretary Bessent, a former Stanley Druckenmiller colleague, has publicly championed Warsh — a signal that the White House expects a chair who won't fight cuts.
Market impact
The Bitcoin chart remains in a four-week green run inside a bearish flag that has tapped its upper boundary four times; historical analogues broke down more often than up, even as the strategic-reserve narrative and a four-star admiral's national-security framing add a structural bid. Separately, Arbitrum's Security Council froze 30,000-plus ETH tied to the Kelp DAO exploit via emergency governance action — a reminder that newer L2s sit well below Bitcoin and Ethereum mainnet on the decentralisation curve, and that exploiters still race for mainnet liquidity once a hack lands.
Frequently asked questions
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What did Kevin Warsh say about a Fed CBDC at his confirmation hearing?
Warsh told senators a Fed-issued central bank digital currency would be a "bad policy choice" the Federal Reserve has no legal right to issue, and agreed that under his chairmanship he would not move the Fed toward exploring one if that power rested with the chair.
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Why is Warsh's CBDC stance bullish for stablecoins and crypto?
Keeping CBDC off the table preserves the private-sector stablecoin franchise. Issuers like Circle and the L1 networks hosting the bulk of stablecoin liquidity — Ethereum and Solana — keep their policy floor intact rather than competing with a Fed-issued digital dollar.
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Did Warsh commit to lowering interest rates for President Trump?
No. Warsh refused to pre-decide on rates, said he never told the president where he should set them, and criticised FOMC officials who opine in advance. He framed interest rates as "the much better way" to run policy than bond and mortgage purchases.
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Why did a four-star admiral testify that Bitcoin is a national-security asset?
The admiral told a Senate hearing that Bitcoin is "a reality" and a valuable computer-science tool for power projection, citing proof-of-work, cryptography and uncensorable peer-to-peer value transfer as cyber-security and deterrence levers against China.
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What happened with the Kelp DAO exploit on Arbitrum?
Arbitrum's Security Council took emergency governance action to freeze 30,000-plus ETH tied to the Kelp DAO exploit, moving the assets to a frozen intermediary wallet accessible only via further governance action — a reminder that newer L2s sit well below Bitcoin and Ethereum mainnet on the decentralisation curve.
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