The Department of Justice ended its criminal investigation into Federal Reserve Chair Jerome Powell on Friday, removing the last major obstacle to Senate confirmation of Kevin Warsh as the central bank’s next leader — a development with consequences for monetary policy and Bitcoin.
U.S. Attorney for the District of Columbia Jeanine Pirro announced the closure of the probe, which had been launched over alleged cost overruns on a $2.5 billion renovation of the Fed’s Washington headquarters.
Pirro said she was transferring the matter to the Fed’s own inspector general, calling for “a comprehensive report in short order.” She left open the possibility of reopening criminal proceedings if warranted.
The investigation had no legal foundation. A federal judge, James Boasberg, quashed DOJ subpoenas in March after a prosecutor conceded the government had found “essentially zero evidence” of a crime, branding the justification as “thin and unsubstantiated.” Powell himself called the probe a political weapon, stating in January that it was “a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.”
A ‘bogus’ probe into Powell
Senator Thom Tillis, a North Carolina Republican on the Senate Banking Committee, had vowed to block Warsh’s confirmation until the probe ended, describing it as “bogus.” His opposition, combined with unified Democratic resistance, had stalled the nomination. With the investigation now closed, leadership expects a swift committee vote and floor confirmation before Powell’s term expires on May 15.
Warsh, 56, a former Fed governor and Stanford professor, testified before the Senate Banking Committee on Tuesday and pledged “strict independence” from the White House on rate decisions. “The president never once asked me to commit to any particular interest rate decision, period,” Warsh said.
Senator Elizabeth Warren called him a “sock puppet” for Trump, while Republicans praised his qualifications.
For Bitcoin, the stakes are significant. The cryptocurrency has traded in the $70,000–$92,000 range this year as the Fed held rates steady at 3.5%–3.75%, with traders watching every signal from the central bank.
Lower interest rates historically reduce yields on conventional assets, pushing capital toward risk assets like Bitcoin. When the DOJ first launched its probe in January, Bitcoin climbed toward $92,000 as institutional investors read the attack on the Fed as a threat to dollar credibility and a potential catalyst for rate cuts.
Warsh is considered more hawkish than Powell on inflation, having called the Fed’s post-pandemic rate response “the biggest policy error in 40 or 50 years.”
Should he take the helm on May 15 and maintain a restrictive stance, Bitcoin bulls betting on rate-cut-driven liquidity expansion may find themselves waiting longer than expected.