The U.S. Department of Justice announced on Friday, July 2, 2026, that it was ending its criminal investigation into Federal Reserve Chair Jerome Powell, clearing the way for Kevin Warsh to be confirmed as the next Fed chair. The decision removes the last major obstacle to Warsh's Senate confirmation and carries significant implications for monetary policy and Bitcoin.
U.S. Attorney for the District of Columbia Jeanine Pirro confirmed the closure of the probe, which had been launched over alleged cost overruns tied to 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," while leaving open the possibility of reopening criminal proceedings if warranted. This means the investigation is not entirely closed but will not interfere with Warsh's confirmation process in the near term.
In reality, the probe lacked legal foundation. 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 investigation a political weapon, stating in January: "It is 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." This statement directly references the political pressure from the Trump administration to cut rates.
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 and experience.
Implications for Bitcoin
Bitcoin 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. Historically, lower interest rates 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. This rally highlights the market's acute sensitivity to Fed independence—when the central bank appears politically compromised, Bitcoin often benefits as an alternative store of value.
Warsh is considered more hawkish on inflation than Powell, 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. The market will closely watch Warsh's first rate decision after taking office to gauge his policy direction.