What is the connection of Kevin Warsh, who is being considered by Trump for the position of Secretary of the Treasury and may subsequently become Powell's successor, to Crypto?
Written by: Karen, Foresight News
On November 12, Beijing time, The Wall Street Journal reported, citing insiders, that President-elect Trump is considering appointing former Federal Reserve governor Kevin Warsh as Secretary of the Treasury. The news also revealed that Kevin Warsh could be nominated as chairman of the Federal Reserve after the current chairman Jerome Powell's term ends in 2026.
Some insiders have indicated that Trump is considering appointing Scott Bessent to lead the White House Economic Council, and if Kevin Warsh becomes the chairman of the Federal Reserve, Trump will nominate Scott Bessent as Secretary of the Treasury in the later part of his term.
On Polymarket, in the prediction market regarding "Who will Trump choose as Secretary of the Treasury?", Kevin Warsh's probability of being selected has risen to 52%, while Scott Bessent stands at 29%.
The Wall Street Journal quoted an insider stating that during a meeting on Wednesday, Trump also asked Kevin Warsh about his past stance on tariffs. Kevin Warsh had previously criticized protectionist trade policies, stating in a 2018 article (Wall Street Journal) that Trump's tariff plan could lead to what he called "economic isolationism," which could significantly harm the economic growth outlook.
In fact, Kevin Warsh, who was considered a candidate for the Federal Reserve leadership during Trump's first term, has once again entered Trump's sight as a potential appointee for Secretary of the Treasury and may in the future succeed Powell as chairman of the Federal Reserve. This move could not only have far-reaching effects on U.S. economic policy, but it could also trigger a series of fluctuations in the financial markets and even the cryptocurrency sector.
Who is Kevin Warsh?
Kevin Warsh was born in 1970 in Albany, New York. He studied public policy at Stanford University, focusing on economics and statistics, and graduated with honors in 1992. Afterward, Kevin Warsh pursued further studies at Harvard Law School, concentrating on the intersection of law, economics, and regulatory policy, and earned his law degree in 1995. Additionally, he completed relevant courses in 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 multiple companies across various industries, including manufacturing, basic materials, professional services, and technology. Additionally, 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 for economic policy to the president and as the executive secretary of the National Economic Council. Kevin Warsh provided advice to the president and senior government officials on issues related to the U.S. economy, particularly on topics such as capital market flows, securities, banking, and insurance.
During this period, he was also a member of the President's Working Group on Financial Markets. In 2006, President Bush nominated Kevin Warsh to serve as a governor of the Federal Reserve (until 2011). At that time, Kevin Warsh was only 35 years old, making him the youngest governor of the Federal Reserve.
Kevin Warsh is currently a visiting fellow at the Hoover Institution at Stanford University and also a lecturer at the university's business school.
It is worth mentioning that, according to a 2017 report by Politico, Kevin Warsh's father-in-law Ronald Lauder is a longtime friend of Trump and an heir to the cosmetics giant Estée Lauder. Trump even collaborated with Estée Lauder in 2004 to launch a cologne called "Donald Trump Fragrance."
What has been Kevin Warsh's stance in the fields of economics and financial policy?
As mentioned above, Kevin Warsh is an expert with rich experience and a deep background in finance and public policy. His career spans multiple fields from academia to finance to government. So what has been Kevin Warsh's stance in the fields of economics and financial policy?
In terms of monetary policy stance, Kevin Warsh has criticized the long-term quantitative easing policy implemented by the Federal Reserve. He believes that such policies may lead to an excessively loose monetary environment, which in turn could trigger inflation or bubbles in the financial markets. Kevin Warsh also advocates that the Federal Reserve should 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 connecting the global economy, and believes that free trade is essential for economic growth and global economic stability.
In addition, Kevin Warsh also advocates controlling fiscal spending, opposing a significant increase in debt burden, believing that this could negatively impact economic growth in the U.S.
What is Kevin Warsh's connection to Crypto?
Kevin Warsh holds a cautious attitude towards the volatility of Bitcoin and most stablecoins, while being 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 would appoint a team to consider creating Fedcoin."
In March of the same year, Kevin Warsh wrote an opinion piece in the Wall Street Journal stating that the price volatility of cryptocurrencies greatly undermined 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 fulfill the founding purpose of Bitcoin.
Kevin Warsh has also invested in two Crypto companies or projects; in 2018, he invested in the algorithmic stablecoin project Basis (formerly Basecoin, which has since dissolved), and in 2021, he invested in the cryptocurrency index fund management company Bitwise. At that time, Basis completed a $133 million funding round, with investors including Bain Capital Ventures, GV, Stanley Druckenmiller, Kevin Warsh, Lightspeed, Foundation Capital, Andreessen Horowitz, and others. Bitwise's website still lists Kevin Warsh as part of its 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 argued that "cryptocurrencies are not mysterious, they are not money, but software. The emergence of stablecoins has made this revolutionary new software resemble money more closely. By improving operational efficiency, a small portion of stablecoins could become immensely valuable. However, most stablecoins will be worthless. The Federal Reserve should establish a wholesale digital currency that will enhance the economic and political standing of the United States while ensuring that volatility does not jeopardize the dollar's dominance. The U.S. and its allies need sound and stable currency more than ever to emerge from a period of weak output, high inflation, and geopolitical confrontation. A narrow, resilient, and efficient digital dollar fully backed by the trust and credit of the United States should be an important component of reforming the U.S. financial and monetary architecture."
Summary
Kevin Warsh's potential appointment could have far-reaching impacts on both U.S. economic policy and the financial markets and Crypto industry. Market participants and cryptocurrency enthusiasts need to closely monitor his policy trends and potential regulatory changes.
If Kevin Warsh can influence Trump's trade policies, it may lead to a more open and stable trade policy for the U.S., which would benefit global trade and economic growth. Moreover, Kevin Warsh's appointment could instill confidence in investors, but there will also be concerns about whether his policies can align with Trump's economic philosophy.
References:
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
