DOJ drops probe into Jerome Powell, paving the way for crypto-friendly Kevin Warsh to lead Fed

The U.S. Department of Justice has dropped its criminal investigation into Federal Reserve Chair Jerome Powell, clearing the way for the Senate to confirm incoming central bank chair Kevin Warsh.

On Friday, in a post on X, the U.S. Attorney for the District of Columbia, Jeanine Pirro, said she would be closing the investigation, which was brought earlier this year over allegations of false statements about the renovation of the Federal Reserve's headquarters.

The move comes just a few days after Warsh testified before the Senate Banking Committee during his nomination hearing. During that hearing, Warsh, who has dozens of crypto investments, including dYdX and Dapper Labs, set the tone for how he would view digital assets if he becomes Fed chair.

When asked if digital assets were incorporated into the financial industry, Warsh said yes, that they were "already part of the fabric of our financial services industry in the United States."

The DOJ's decision to drop the criminal investigation could mean that Sen. Thom Tillis, R-N.C., a member of the Senate Banking Committee whose vote is essential in passing Warsh's nomination, would vote for him.

During the hearing, Tillis called for the investigation to end and told Warsh he liked him, but couldn't vote for his nomination until the probe was dropped.

Others have mused that clearing Warsh's nomination out of the Senate could clear space for the Senate Banking Committee to advance broad crypto market legislation. The bill has been stuck in that committee over the past year.

In a post on Friday on X, Grayscale Head of Research Zach Pandl said that after the Senate Banking Committee confirms Warsh, it could move ahead with a markup for the Clarity Act.

"This is how dominos will fall for CLARITY Act imho," Pandl said.