What impact will former Coinbase advisor Hassett have on the Fed and the encryption industry?

Former Coinbase Global Advisory Council member Kevin Hassett has seen the nomination probability for Fed Chairman in the prediction market soar to 56%. This economist, who holds over $1 million in COIN stock, would make history as the first Fed leader to deeply engage in encryption assets if elected. President Trump’s public criticism of current Chairman Powell has escalated, with Treasury Secretary Basant leading the final interview, and an announcement is expected before Christmas. Analysts believe Hassett's dovish stance and encryption background could reshape the U.S. monetary policy and digital asset regulatory framework.

Analysis of the Fed Chair Election Landscape: Hassett Emerges Uniquely

The latest data from the prediction market Kalshi shows that the probability of Kevin Hassett being nominated as the Fed chairman surged by 15 percentage points within 24 hours, reaching a significant lead of 56%, far surpassing other major competitors. Current Fed governor Christopher Waller ranks second with a 20% probability, followed closely by former governor Kevin Walsh at 15%. This dramatic shift in probability distribution occurred as Treasury Secretary Scott Basset completed his second round of interviews, indicating that Trump's team has entered the final stage of candidate evaluation.

From a political context, Hassett's long-standing cooperative relationship with Trump is a key factor in his emergence. As the former chairman of the White House Council of Economic Advisers, Hassett established a close working relationship with Trump during the period from 2017 to 2019 and will again provide economic policy advice to Trump in the 2024 election. Notably, Hassett has consistently advocated for a more accommodative monetary policy, which is highly consistent with Trump's recent public criticism of Powell for “raising interest rates too quickly and lowering them too slowly,” laying a solid foundation for policy coordination between the two.

The current chairman Jerome Powell's term will end in May 2026, but the White House prefers to determine his successor several months in advance to ensure a smooth transition of power. Historical data shows that changes in the Fed chair often trigger market volatility, especially when the candidates' policy positions differ significantly from the incumbent. In 1996, during Alan Greenspan's reappointment, market volatility increased by 40% compared to the previous period, while in 2018, when Powell succeeded Janet Yellen, the S&P 500 index experienced a fluctuation of 7% within a week of his appointment.

From a timeline analysis, Trump hopes to announce his nominee before Christmas, but insiders warn that the final decision may be postponed until early 2026. This time pressure stems from the political considerations of the midterm elections in 2026— the new chair needs enough time to establish policy credibility before the election to avoid monetary policy becoming a focal point of campaign controversy. Meanwhile, the Senate's confirmation process for nominations typically takes 60 to 90 days, further compressing the decision-making time window.

Comparison of Fed Chair Candidate Probabilities and Policy Tendencies

Kevin Hassett: 56% probability, strongly dovish, holds COIN stock

Christopher Waller: 20% probability, neutral bias towards hawkish, traditional monetary policy framework

Kevin Walsh: 15% probability, policy unknown, former advisor to Bush

Michelle Bowman: 5% probability, moderately hawkish, focused on community bank regulation.

Rick Reed: 4% probability, unknown position, from BlackRock

Encryption Background and Policy Position: From Coinbase Advisor to Fed Helmsman

Hassett's deep connection to the encryption industry makes him the most digitally asset-oriented chairman candidate in the history of the Fed. In November 2025, Coinbase officially announced the establishment of a global advisory council, with Hassett as a member, specifically responsible for coordinating communication with global regulatory agencies. According to financial disclosure documents submitted to the government ethics office, Hassett holds COIN stock valued between $1 million and $5 million and receives $50,001 in advisory compensation from Coinbase, raising discussions about potential conflicts of interest.

From an academic and research perspective, Hassett, during his tenure as a distinguished visiting scholar at the Hoover Institution at Stanford University, has consistently focused on digital currency and fintech innovation. In his 2024 study “The Double-Edged Sword of Central Bank Digital Currency,” he points out that the Fed should cautiously advance the digital dollar project, prioritizing private sector innovation, a position that aligns closely with the regulatory advocacy of crypto firms like Coinbase. Unlike Powell's positive attitude towards central bank digital currency, Hassett believes that private stablecoins and central bank currency can coexist and complement each other.

In terms of monetary policy stance, Hassett is a well-known representative of the dovish camp. Against the backdrop of gradually easing inflation in 2024-2025, he has publicly criticized the Fed for keeping interest rates at “unnecessarily high levels” multiple times, advocating for a more aggressive and faster rate-cutting cycle. This stance has received public support from Trump and aligns with the general expectations of the cryptocurrency industry for loose liquidity. Historical data shows that when real interest rates fall by 100 basis points, Bitcoin's average performance over the next three months outperforms the S&P 500 index by about 25 percentage points.

In terms of regulatory philosophy, Hasset tends to adopt a “technology-neutral” regulatory framework. During his tenure as the head of the White House Digital Assets Working Group, he promoted the establishment of clear standards to distinguish between security tokens and utility tokens, a classification method that was later adopted by some court rulings. Analysts believe that if he leads the Fed, he may reassess the restrictions on banks' participation in digital assets and hold a more open attitude toward stablecoin issuers accessing the Fed's payment system.

Market Impact Outlook: Dual Changes in Monetary Policy and Encryption Regulation

Bitwise senior investment strategist Juan Leon pointed out: “If Hasset becomes the Fed chair, it will be a strong positive for digital assets. First, he is an aggressive dove, openly criticizing the current interest rates as too high and advocating for faster and deeper rate cuts; second, he has led the White House digital asset working group, shaping a pro-encryption regulatory direction; third, he has served on Coinbase's advisory board and holds a significant amount of COIN stock.” This policy expectation has already begun to be reflected in market pricing, with COIN's stock price rising 4.5% in a single day after the rumors surfaced.

From the perspective of the monetary policy transmission mechanism, Hassett's dovish stance may influence the encryption market through three channels. First, interest rate cuts directly lower the opportunity cost of holding non-yielding digital assets; second, a weaker dollar boosts the relative value of dollar-denominated digital assets; third, an increase in risk appetite drives funds towards high-beta digital assets. Futures market data shows that traders have lowered their expectations for the federal funds rate at the end of 2026 from 4.25% to 3.75%, and this repricing is reshaping the risk-return characteristics of various assets.

In terms of the regulatory environment, the Fed has significant say over banks' custody of encryption assets, stablecoin reserve requirements, and the design of the digital dollar. If Hassett takes office, he may accelerate the approval process for banks to participate in encryption custody business, reassess the reserve asset requirements for stablecoin issuers, and adopt a more cautious approach to the advancement of central bank digital currencies. These policy changes will directly impact trading platforms like Coinbase that have established banking partnerships, and may also create market opportunities for new fintech companies.

From the perspective of cross-market correlation, the shift in the Fed's policy stance may strengthen the correlation between digital assets and traditional assets. In the early stages of a rate-cutting cycle, digital assets typically rise in sync with tech stocks, but as the cycle progresses, their trends may diverge—historical data shows that within 12 months after the Fed begins cutting rates, the correlation between Bitcoin and the Nasdaq index drops from 0.6 to 0.3. This dynamic correlation pattern provides important insights for asset allocation.

Potential Risks and Challenges: Balancing Conflicts of Interest and Political Games

Hassett's holdings in digital assets inevitably raise ethical controversies. Sarah Binder, the director of governance studies at the Brookings Institution, pointed out: “A Fed chair holding millions of dollars in crypto-related assets will face strict scrutiny for conflicts of interest after every policy decision.” According to the Federal Reserve Act, Fed officials must adhere to strict ethical standards and avoid participating in decisions that directly affect their personal financial interests, which may compel Hassett to abstain from key votes.

Historically, when senior officials of the Fed face similar situations, they typically adopt two strategies: first, placing relevant assets into a blind trust, and second, completely divesting controversial assets. In 2014, then-Fed Governor Jeremy Stein avoided several regulatory votes due to his holdings in bank stocks; in 2018, Vice Chairman Randall Quarles sold related stocks to participate in insurance industry regulation. If Hassett wishes to fully engage in encryption policy development, he may have to reduce or isolate his COIN holdings.

The political challenges cannot be ignored either. The Senate Banking Committee's confirmation hearing for the nomination of the Fed Chairman will focus on the candidate's independence and professionalism, and Hassett's encryption background is bound to become a focal point of questioning from both parties. Democratic Senator Elizabeth Warren has publicly stated that she will rigorously scrutinize “any candidate with excessive ties to speculative assets,” while there are also significant divisions within the Republican Party regarding digital assets. This political landscape could complicate the confirmation process.

International coordination is another key challenge. The Fed's central position in the global financial system requires its leaders to maintain close cooperation with central banks in various countries, while Hassett's pro-encryption stance may differ from traditional institutions like the Bank for International Settlements. Currently, the Bank for International Settlements is pushing for stricter capital requirements for digital assets, while Hassett has publicly criticized this “one-size-fits-all” regulatory approach, and this ideological difference may affect multinational policy coordination.

Historical Comparison and Industry Insights: The Policy Evolution from Volcker to Powell

Looking back at the history of the Fed chair transitions, each change in leadership has been accompanied by an adjustment in policy paradigms. After Paul Volcker took office in 1979, he curbed inflation through aggressive interest rate hikes. In 1987, Alan Greenspan provided emergency liquidity after the stock market crash. In 2018, Jerome Powell paused the interest rate hike cycle under pressure from Trump—these key moments illustrate that the personal philosophy and policy preferences of the Fed chair have a profound impact on financial markets.

Compared to previous chairmen, Hassett's potential appointment has two unique backgrounds. First, he is the first Fed chair candidate with direct experience in the digital asset field, and this technical background may change the Fed's traditional cautious attitude towards financial innovation. Second, he faces the most complex macro environment in modern history—managing ongoing inflationary pressures, record government debt, and guiding the technological transformation of artificial intelligence and digital currencies.

For the cryptocurrency industry, changes in the Fed's leadership could accelerate its institutionalization process. During Powell's tenure, the Fed's attitude towards digital assets evolved from neglect to attention and then to cautious acceptance, approving multiple banking services, including cryptocurrency custody. If Haslett takes office, this process may further accelerate, especially in areas such as bank participation in staking services, stablecoin regulatory frameworks, and innovations in cross-border payments.

From the global trends in central banking, it is becoming the new norm for technical experts to serve as central bank governors. The Governor of the Reserve Bank of India, Shaktikanta Das, has promoted the digital rupee project, the President of the Central Bank of Brazil, Roberto Campos Neto, actively advocates for the integration of digital currency, and the President of the European Central Bank, Christine Lagarde, holds an open attitude towards the digital euro. Hassett's potential appointment aligns with this trend, but it elevates it to a new height - not only a technical expert but also a direct participant in the relevant industry.

When the selection of the Fed chair intersects historically with the cryptocurrency industry, what we witness is not only a change in individual positions but also a critical juncture in the restructuring of boundaries between traditional finance and digital assets. The potential nomination of Hassett symbolizes that crypto assets are moving from the periphery of the financial system to its core, but it also brings unprecedented governance challenges—how to balance innovation and stability, private interests and public responsibility, technological breakthroughs and institutional continuity. Regardless of who the final candidate is, this discussion itself has already proven that crypto assets are no longer a peripheral phenomenon that policymakers can ignore, but will become one of the core issues in future financial governance. For market participants, true wisdom may lie not in predicting specific personnel changes but in understanding the deeper trends behind this transformation: monetary policy and financial innovation are seeking a balance anew in the digital age, and this process will reshape the investment landscape of the next decade.