If Hassett becomes the new chairman of the Federal Reserve, would that be a major boon for the crypto market?

Author: Bruce

As the Trump administration prepares its new leadership team, the nomination of the Federal Reserve Chair has entered its final stage. The current frontrunner, Kevin Hassett, is not only a key economic advisor to Trump but also a staunch supporter of the crypto industry.

The direct impacts of monetary policy: liquidity and asset prices

As the highest decision-maker on US monetary policy, the attitude of the Federal Reserve Chairman directly determines the cost of capital and liquidity in the market.

• Hassett's inclination: The market generally expects him to push for more aggressive interest rate cuts if he takes office.
• Positive for Crypto: A loose monetary environment (low interest rates) typically favors the price increase of risk assets such as Bitcoin. In fact, after news broke that he was a leading candidate, US Treasury yields fell, reflecting market expectations of improved liquidity.

The substantive ownership of regulatory power over stablecoins

Under the GENIUS Act, which is scheduled to be implemented in 2025, the Federal Reserve will play a central role in the regulatory framework for stablecoins.

• Key oversight body: The Federal Reserve will directly regulate stablecoin issuers and establish rules for the interaction between "on-chain dollars" and the traditional financial system.
• Relevance to the Treasury Market: As stablecoins expand, their relationship with the US Treasury market will become closer as they become major buyers of US Treasury bonds. The Federal Reserve's stance will determine whether stablecoins can expand smoothly, thereby affecting whether hundreds of billions of dollars can flow smoothly into the crypto market.

The "gatekeeper" between traditional finance and the cryptocurrency world

The Federal Reserve determines the degree to which the banking system is open to the crypto industry.

• Compliance pathway: Whether banks and non-bank financial institutions can compliantly provide services to Crypto companies and participate in stablecoin business depends entirely on the green light from the Federal Reserve and relevant regulatory agencies.
• Industry Integration: The attitude of the next chairman will determine whether the Crypto industry continues to maintain an "independent ecosystem" or can fundamentally integrate into the mainstream financial system and gain wider institutional adoption.

Who is Kevin Hassett?

As the candidate with the best chance of winning (@Polymarket's probability once exceeded 50%), Hassett's connection with the Crypto industry is extraordinary:

• Insider background: He not only holds millions of dollars worth of @coinbase stock, but also served as a member of Coinbase's Academic and Regulatory Advisory Board.
• Policy Stances: He participated in the White House Digital Assets Task Force, advocating for leaving room for innovation in regulation, and believes that crypto technology is an important variable in the future economic structure.

Unlike the SEC chairman, who primarily influences the industry through enforcement actions, the Federal Reserve chairman fundamentally shapes the cryptocurrency industry's environment by controlling the "tap" of funds (interest rates) and the "gates" of the banking system (regulation of entry).

If a knowledgeable and friendly candidate like Hassett were to take office, it could pave the way for Crypto to move from a "fringe asset" to "mainstream finance".