DOJ Drops Probe of Powell, Clearing Way for Kevin Warsh

The U.S. Department of Justice has closed its criminal investigation into Federal Reserve Chair Jerome Powell that examined whether he made false statements about renovations to the Fed’s headquarters. The U.S. Attorney for the District of Columbia, Jeanine Pirro, announced the closure Friday in a post on X. The decision removes a legal issue that had affected the Senate’s consideration of Kevin Warsh’s nomination to lead the Fed.

Kevin Warsh, a former Fed governor and Treasury official with extensive private-sector ties, recently testified before the Senate Banking Committee as part of his nomination hearing. During that session he acknowledged personal holdings in digital assets and said that crypto and related technologies are “already part of the fabric of our financial services industry in the United States.” Disclosure forms show Warsh holds multiple investments in crypto-related companies, including positions in dYdX and Dapper Labs.

Sen. Thom Tillis, a Republican member of the Banking Committee whose vote is viewed as important for advancing the nomination, told the committee he liked Warsh but would not support the nomination while the Powell investigation remained open. With the DOJ closing the case, committee members who had been waiting on the probe may proceed to a committee vote to advance Warsh’s nomination to the full Senate.

Industry analysts and some observers expect Warsh’s confirmation could affect the committee’s ability to schedule and consider crypto market legislation that has stalled for more than a year. Zach Pandl, head of research at Grayscale, posted on X that committee confirmation of Warsh could allow the panel to move forward with a markup for the CLARITY Act, a bill that aims to define regulatory frameworks for digital assets.

The DOJ did not provide further public details about its reasons for dropping the probe in Pirro’s post. The investigation began earlier this year and had prompted requests from some senators for a clear resolution before they acted on the Warsh nomination.

If the Senate Banking Committee votes to advance Warsh, the full Senate will take up his nomination. A confirmation would make Warsh the next chair of the Federal Reserve, succeeding Jerome Powell. Warsh previously served as a Fed governor from 2006 to 2011 and as deputy chief of staff to Treasury Secretary Hank Paulson, in addition to holding private-sector investments and advisory roles.