The U.S. Department of Justice dropped its criminal probe into Federal Reserve Chair Jerome Powell on Friday, removing the single biggest political obstacle standing between President Donald Trump and full control over the nation’s central bank. The supporting evidence appears in the cited X post.
Attorney General Jeanine Pirro announced the closure, redirecting the cost overrun investigation into a Fed building renovation project to the Fed’s own inspector general.
The move immediately shifted sentiment on prediction markets.
Odds on Kalshi tracking Warsh’s confirmation before May 15 jumped from roughly 30% to above 80% within hours of Pirro’s announcement, a sharp swing that underscores how directly the DOJ investigation had been suppressing the timeline for installing Trump’s preferred Fed chief.
The Tillis Blockade and How It Was Removed
Republican Senator Thom Tillis had drawn a firm line in the sand, pledging to withhold support for Warsh’s confirmation for as long as the Justice Department pursued what he called a “bogus investigation” against the sitting Fed chair.
That threat was enough to put Warsh in a genuine holding pattern, since Senate Republicans need near-unanimous caucus support to advance a confirmation. One credible holdout is all it takes to stall the process.
Pirro addressed the closure directly in a post on X, saying she had asked the inspector general to review the renovation situation and issue a comprehensive report. Tillis had made his position clear publicly, and Pirro’s announcement appears to have been structured specifically to satisfy his stated condition. “I expect a comprehensive report in short order and am confident the outcome will assist in resolving, once and for all, the questions that led this office to issue subpoenas,” Pirro wrote.
She added a pointed qualifier: the criminal file could be reopened if the facts supported it. “I will not hesitate to restart a criminal investigation should the facts warrant doing so,” Pirro wrote.
The statement threads a narrow political needle, letting the White House claim the probe is closed while preserving legal leverage over Powell during any transition period.
What a Warsh Fed Means for Crypto and Monetary Policy
Kevin Warsh appeared before the Senate in a confirmation hearing earlier this week, with a final floor vote now expected to move forward absent new complications.
Warsh’s personal financial disclosures have shown exposure to crypto-related assets, a detail that has drawn attention from digital asset advocates watching the Fed leadership transition closely.
His broader monetary philosophy aligns with Trump’s consistent criticism of Powell for keeping interest rates elevated longer than the president preferred.
That disagreement over rate policy sits at the center of why this nomination matters far beyond standard personnel politics. Trump has argued loudly and repeatedly that Powell’s reluctance to cut rates has weighed on U.S.
economic growth. Installing Warsh gives the administration a Fed chair whose rate instincts are closer to the White House’s stated preferences, which could eventually translate into a looser monetary environment if economic conditions allow.
The implications extend into digital asset regulation as well. The Federal Reserve plays a direct role in writing and enforcing rules that govern bank interactions with crypto firms, stablecoin issuers, and payment infrastructure.
A Fed board shaped more by Trump allies gives the administration greater influence over those regulatory decisions, which have historically moved slowly and cautiously under Powell’s tenure.
The Fed’s stablecoin and crypto bank charter guidance has been a persistent friction point for the industry, with applications from crypto-native firms facing extended review timelines and cautious staff recommendations.
A leadership change at the top does not guarantee immediate policy reversals, but it does reset the internal culture around how aggressively staff pursue novel crypto-related approvals.
Warsh would also join a Fed board where several other Trump-aligned appointments are already in place or pending, further consolidating the administration’s footprint across the institution.
For crypto markets, the combination of a more rate-flexible Fed chair and a board more receptive to digital asset innovation represents a meaningful structural shift in the regulatory backdrop, even if specific rule changes take months or years to materialize.
The confirmation vote timing remains subject to Senate scheduling, but the political pathway is now considerably cleaner than it was 48 hours ago.
Kalshi’s prediction market move from 30% to above 80% reflects how directly traders interpreted the DOJ’s retreat as a near-decisive event in Warsh’s path to the most powerful central banking seat in the world.
Not Financial Advice: This article is for informational purposes only. Crypto investments are highly volatile. Always do your own research.
