The Fed Chair transition is imminent: Analysis of five candidates and their impact on the crypto market.

U.S. Treasury Secretary Scott Bessent recently announced the final candidate list to succeed Jerome Powell as Fed Chairman. The five candidates include Christopher Waller, Michelle Bowman, Kevin Warsh, Kevin Hassett, and Rick Rieder. This article will analyze the policy inclinations of each candidate, market reactions, and the profound impact the new Fed Chairman may have on monetary policy, digital financial innovation, and the Crypto Assets market.

Final Candidates List Revealed: Background and Selection Process

U.S. Treasury Secretary Scott Bessenet announced the five final candidates to succeed Fed Chairman Jerome Powell on CNBC, confirming that President Trump is expected to make a final decision by the end of the year. This important personnel change comes as the current Fed Chairman Powell plans to step down at the end of the year.

Candidate Lineup and Selection Schedule

• Current Fed Officials: Christopher Waller (Fed Governor), Michelle Bowman (Fed Governor)
• Former Fed Official: Kevin Warsh (former Fed Governor)
• Department Representative: Kevin Hassett (Director of the White House National Economic Council)
• Financial Industry Representative: Rick Reed (BlackRock Executive)

Besant is responsible for overseeing the interview process. He stated that plans are in place for another round of discussions after Thanksgiving, followed by submitting a “high-quality candidate list” to the president. Trump reiterated to reporters that he plans to announce the new Fed chair candidate before the end of the year.

Political Background and Policy Divergence: The Conflict Between Trump and Powell

President Trump has repeatedly criticized Powell for not lowering interest rates quickly enough and recently stated, “We now have a completely unwise person,” referring specifically to Powell's stance against larger rate cuts.

monetary policy expectations

Policymakers expect to cut rates by 25 basis points at the upcoming meeting on October 29. The new Fed chair will fill a 14-year term starting from February 1, succeeding Stephen Milan, who is on unpaid leave due to his role as chairman of the White House Council of Economic Advisers.

The Senate confirmation process will follow, and lawmakers are expected to closely examine the nominee's positions on inflation, employment, and central bank independence. Powell's term as Fed chairman will end in May next year, but his term as a Fed governor will last until early 2028.

Market Predictions and Candidate Policy Tendencies Analysis

According to data from the prediction market Polymarket, Kevin Hassett has emerged as the leading candidate, receiving 36% of the betting support, while Christopher Waller follows closely with 23%. Analysts believe that Hassett's close relationship with the White House gives him an advantage.

Policy Focus and Market Impact of Each Candidate

• Kevin Hassett: As a former White House economic advisor, he is optimistic about ending the U.S. government shutdown, recently stating that the deadlock could end in a few days, providing a potential boost for investors waiting for political clarity.
• Christopher Waller: Holds an open attitude towards digital finance and financial innovation, with growing influence. At last week’s Fed payments conference, he proposed a new “payment account” system that could allow crypto-focused companies to access the Fed's payment network without a full banking license.
• Rick Reed: As a senior executive at BlackRock, he has extensive experience in fixed assets and portfolio construction, which may bring a more market-oriented policy approach.
• Michelle Bowman: As a current Fed governor, she has extensive experience in banking supervision and is expected to continue the prudent financial regulatory policies.
• Kevin Warsh: As a former Fed governor, he has experience in dealing with financial crises and may adopt a more hawkish stance on monetary policy.

Potential Impact on Crypto Assets and Digital Finance

Wol's “Payment Account” System and Its Integration with the Crypto Assets Industry

The concept of a “payment account” system proposed by Christopher Wall is particularly worth noting for the crypto industry. This system may provide Crypto Assets companies with access to the Fed's payment network without the need to obtain a full banking license, marking an important milestone in the integration of traditional finance and the digital asset space.

Attitudes of Each Candidate Towards Digital Assets

• Waller: Clearly supports financial innovation and has publicly discussed the modernization of digital currencies and payment systems.
• Hassett: More focus on traditional economic policy, but as a confidant of Trump, may support policies that favor market innovation.
• Reed: From the world's largest asset management company BlackRock, has practical business experience in asset digitization.
• Baumann and Varsh: Digital assets are mentioned less frequently in public records, possibly focusing more on traditional financial stability.

Monetary Policy Outlook and Market Impact

Whoever is ultimately elected will face the following key challenges:

1. Normalization of interest rate policy: Seeking a balance between inflationary pressures and economic growth.
2. Balance Sheet Management: Managing the Fed's balance sheet of over $7 trillion.
3. Digital Financial Innovation: Addressing emerging topics such as central bank digital currencies (CBDC), stablecoin regulation, etc.
4. Financial Stability: Maintaining system stability in a rapidly changing market environment

Conclusion

The leadership change at the Fed occurs during a critical transformation period for the global financial system, where traditional monetary policy intertwines with digital financial innovation. The policy inclinations of the candidates will directly influence the trajectory of monetary policy, the financial regulatory framework, and the development path of digital assets over the next four years. In particular, the concept of a “payment account” system proposed by Christopher Waller demonstrates the Fed's open thinking towards the modernization of the financial system and the integration of Crypto Assets.

For the crypto assets market and traditional financial participants, closely monitoring this personnel change process is crucial. The new chairman's policy orientation will not only determine the cyclical changes in dollar liquidity but may also shape the architecture of global financial infrastructure over the next decade. Against the backdrop of the accelerated integration of digital currencies and traditional finance, this appointment will become a key indicator for observing the direction of U.S. monetary policy.