Warsh Says Crypto Belongs in Finance; Warren Calls Him ‘Sock Puppet’

Kevin Warsh told the Senate Banking Committee on Tuesday that digital assets are already woven into U.S. financial services and should be incorporated into the industry.

The nomination hearing, held in Washington, focused largely on interest rates and monetary policy. When asked whether digital assets should be part of the financial system to provide investment options and consumer protections, Warsh answered in the affirmative and stated, “Digital assets are already part of the fabric of our financial services industry in the United States.”

Warsh is President Trump’s nominee to replace Jerome Powell as Federal Reserve chair. He served on the Fed’s Board of Governors from 2006 to 2011 and worked as a banker at Morgan Stanley. He has previously described bitcoin as an “important asset that can help inform policymakers.”

On the question of a central bank digital currency, Warsh expressed openness to studying a limited CBDC but told Senator Bernie Moreno that issuing one would be a “bad policy choice.” He noted that current Fed leadership has said a CBDC would not be issued without congressional approval and that any proposal would require careful consideration.

Warsh’s financial disclosure, released before the hearing, lists multiple crypto-related investments. Holdings include decentralized derivatives platform dYdX, decentralized exchange protocol Lighter, venture firm Polychain, NFT company Dapper Labs, and tokens such as Solana and Optimism.

Senator Elizabeth Warren used her committee time to raise conflict-of-interest and accountability concerns. She warned that having a friendlier Fed chair could give the president access to the central bank’s powers to benefit family members or political allies and said, “Having a sock puppet in charge of the Fed would also give the president access to the Fed’s powerful authorities to enrich himself, his family and his Wall Street buddies.”

Other senators brought up separate procedural and oversight issues. Senator Thom Tillis of North Carolina, whose vote is seen as important to advancing the nomination, said he likes Warsh personally but will not vote to move nominees forward until a Department of Justice investigation into renovations at the Fed’s headquarters is resolved.

Committee exchanges also referenced President Trump’s recent criticism of Powell and the ongoing Justice Department inquiry into the Fed renovation project. Warsh has criticized Powell’s interest-rate decisions in the past, and his nomination follows a contentious period for the central bank’s leadership.

At the hearing, Warsh faced questions on interest-rate strategy, financial stability and regulatory oversight in addition to digital assets. He emphasized the importance of predictable policy and said the Fed must balance financial stability with supporting innovation in the payment system and markets.

Warsh told senators that policymakers should draw lessons from current crypto activity when shaping regulation and monetary policy. Republicans on the committee have expressed concerns that a CBDC could enable broad monitoring of transactions, while others argue digital currencies could expand payment options and investor access.