DOJ Drops Powell Investigation, Clearing Path for Crypto-Friendly Warsh as Fed Chair

The U.S. Department of Justice has dropped its criminal investigation into Federal Reserve Chair Jerome Powell, clearing the way for the Senate to confirm incoming central bank chair Kevin Warsh. U.S. Attorney for the District of Columbia Jeanine Pirro announced on Friday that she would be closing the investigation, which was brought earlier this year over allegations of false statements about the renovation of the Federal Reserve's headquarters.

Warsh's Pro-Crypto Senate Testimony

The timing of the DOJ decision follows Warsh's testimony before the Senate Banking Committee during his nomination hearing. During that hearing, Warsh, who has dozens of crypto investments including dYdX and Dapper Labs, outlined his approach to digital assets. When asked if digital assets were incorporated into the financial industry, Warsh responded that they were "already part of the fabric of our financial services industry in the United States."

Political Path Forward

The DOJ's decision to drop the investigation removes a key obstacle to Warsh's confirmation. Senator Thom Tillis, R-N.C., a member of the Senate Banking Committee whose vote is essential for passing Warsh's nomination, had previously called for the investigation to end during the hearing. Tillis told Warsh he liked him but could not vote for his nomination until the probe was dropped.

Potential Crypto Legislation Momentum

Observers have noted that clearing Warsh's nomination could create momentum for broader crypto market legislation. A crypto bill has been stuck in the Senate Banking Committee over the past year. In a post on Friday on X, Grayscale Head of Research Zach Pandl suggested that after the Senate Banking Committee confirms Warsh, it could move ahead with a markup for the Clarity Act. "This is how dominos will fall for CLARITY Act imho," Pandl said.