What is Kevin Warsh's connection to Crypto, as he is being considered by Trump for the position of Treasury Secretary and may later become Powell's successor?
Written by: Karen, Foresight News
On November 12, Beijing time, the Wall Street Journal quoted knowledgeable sources revealing that elected President Trump is considering appointing former Federal Reserve governor Kevin Warsh as Treasury Secretary. The report also indicated that after the current Federal Reserve Chair Jerome Powell's term ends in 2026, Kevin Warsh could be nominated as the Federal Reserve Chair.
Some knowledgeable individuals have stated that Trump is considering appointing Scott Bessent to lead the White House Economic Council, and if Kevin Warsh becomes the Federal Reserve chairman, Trump will nominate Scott Bessent as Treasury Secretary later in his term.
On Polymarket, in the prediction market regarding 'Who will Trump choose as Treasury Secretary?', Kevin Warsh's probability of winning has risen to 52%, while Scott Bessent stands at 29%.
The Wall Street Journal quoted a knowledgeable person as saying that at Wednesday's meeting, Trump also asked Kevin Warsh about his past positions on tariffs. Kevin Warsh has consistently criticized trade protectionist policies, stating in an article published in 2018 (Wall Street Journal) that Trump's tariff plan could lead to what he termed 'economic isolationism,' which would significantly harm the economic growth outlook.
In fact, Kevin Warsh, who was considered a candidate for the leadership of the Federal Reserve during Trump's first term, is once again in Trump's sights as a potential appointee for Treasury Secretary, and may in the future succeed Powell as Federal Reserve Chair. This move could not only have profound implications for U.S. economic policy but could also trigger a series of fluctuations in financial markets and even the cryptocurrency space.
Who is Kevin Warsh?
Kevin Warsh was born in 1970 in Albany, New York. He studied public policy at Stanford University with a focus on economics and statistics, graduating with honors in 1992. He then pursued further studies at Harvard Law School, focusing on the intersection of law, economics, and regulatory policy, and earned his law degree in 1995. Additionally, he completed relevant courses on market economics and debt capital markets at Harvard Business School and MIT Sloan School of Management.
In 1995, Kevin Warsh worked in the mergers and acquisitions department of Morgan Stanley in New York, serving as a financial advisor to several companies across multiple industries, including manufacturing, basic materials, professional services, and technology. In addition, he helped build capital market transactions and facilitated fixed income and equity financing.
In February 2002, Kevin Warsh resigned from his position as vice president and executive director at Morgan Stanley to join George W. Bush's administration. He served as a special assistant to the president for economic policy and executive secretary of the National Economic Council. Kevin Warsh advised the president and senior government officials on issues related to the U.S. economy, particularly those involving capital market flows, securities, banking, and insurance.
During this time, he was also a member of the President's Financial Markets Working Group. In 2006, President Bush nominated Kevin Warsh to serve as a Federal Reserve governor (a position he held until 2011). At that time, Kevin Warsh was only 35 years old, making him the youngest Federal Reserve governor.
Kevin Warsh is currently a visiting fellow at the Hoover Institution at Stanford University and a lecturer at the business school of the same university.
It is worth mentioning that, according to Politico in 2017, Kevin Warsh's father-in-law Ronald Lauder is a longtime friend of Trump and the heir to cosmetics giant Estée Lauder. Trump even collaborated with Estée Lauder in 2004 to launch a cologne called 'Donald Trump Perfume.'
What has been Kevin Warsh's stance in the fields of economic and financial policy?
As mentioned above, Kevin Warsh is an expert with extensive experience and a strong background in the fields of finance and public policy. His career spans multiple areas, from academia and finance to government. So what has been Kevin Warsh's stance in the fields of economics and financial policy?
Regarding monetary policy positions, Kevin Warsh has previously criticized the long-term quantitative easing policy implemented by the Federal Reserve. He believes that such policies could lead to an excessively loose monetary environment, potentially triggering inflation or bubbles in financial markets. Kevin Warsh also advocates for the Federal Reserve to maintain its policy independence and not be influenced by political pressure, contrasting with Trump's approach of exerting influence over the Federal Reserve.
In terms of economic growth and trade policy, Kevin Warsh has been an advocate for free trade, emphasizing its importance as a glue that connects the global economy, and believing that free trade is crucial for economic growth and global economic stability.
In addition, Kevin Warsh advocates for controlling fiscal spending and opposes significant increases in debt burdens, believing that this could have a negative impact on U.S. economic growth.
What is Kevin Warsh's connection to Crypto?
Kevin Warsh has a cautious attitude towards the volatility of Bitcoin and most stablecoins but is open to wholesale central bank digital currencies (CBDCs). As early as 2018, Warsh stated, 'If cryptocurrencies and blockchain technology are indeed the future of money, then central banks around the world need to get involved. If he returns to the Federal Reserve, he will appoint a team to consider creating Fedcoin.'
In March of the same year, Kevin Warsh commented in the Wall Street Journal, stating that the price volatility of cryptocurrencies greatly undermines their practicality as a reliable unit of account or effective means of payment. However, a new generation of cryptocurrencies is about to emerge, some of which may possess more monetary attributes and better meet the founding purposes of Bitcoin.
Kevin Warsh has invested in two crypto companies or projects as an investor, investing in the algorithmic stablecoin project Basis (formerly Basecoin, now defunct) in 2018, and in the cryptocurrency index fund management company Bitwise in 2021. Basis raised $133 million at the time, with investors including Bain Capital Ventures, GV, Stanley Druckenmiller, Kevin Warsh, Lightspeed, Foundation Capital, and Andreessen Horowitz. Kevin Warsh is still listed on Bitwise's website as part of the advisory and investor team.
In November 2022, Kevin Warsh published an article (Money Matters: The US Dollar, Cryptocurrency, and the National Interest), in which he stated, 'Cryptocurrency is not mysterious, it is not money, but software. With the emergence of stablecoins, this revolutionary new software has started to resemble money more. By improving operational efficiency, a small portion of stablecoins may become highly valuable. However, most stablecoins will be worthless. The Federal Reserve should establish a wholesale digital currency, which would improve the economic and political standing of the United States while ensuring that volatility does not threaten the dollar's dominance. The U.S. and its allies need sound and stable currencies now more than ever to overcome periods of weak output, high inflation, and geopolitical confrontations. A narrow, resilient, and efficient digital dollar fully trusted and backed by the U.S. should be an important part of reforming the U.S. financial and monetary architecture.'
Summary
Kevin Warsh's potential appointment could have far-reaching effects on U.S. economic policy, as well as on financial markets and the crypto industry. Market participants and cryptocurrency enthusiasts need to closely monitor his policy direction and potential regulatory changes.
If Kevin Warsh can influence Trump's trade policy, it may make U.S. trade policy more open and stable, which would benefit global trade and economic growth. Furthermore, Kevin Warsh's appointment may also instill confidence in investors, but there will be concerns about whether his policies can align with Trump's economic philosophy.
Reference:
https://www.wsj.com/politics/policy/trump-considers-warsh-serving-as-treasury-secretaryand-then-fed-chair-827207e0
https://www.federalreservehistory.org/people/kevin-m-warsh
https://x.com/YahooFinance/status/1859271737306739288
https://www.hoover.org/profiles/kevin-warsh