Recently, a legal and political battle between former U.S. President Trump and the Federal Reserve has entered the public eye. At the heart of this dispute is the U.S. government's request for the Supreme Court to intervene, seeking to allow the removal of a sitting Federal Reserve governor during ongoing litigation. To many, this may seem like just another high-level political struggle, but what lies beneath is a fundamental issue for the global financial system: the independence of central banks.

The impact of this turmoil is not confined to the traditional financial sector. Like a stone cast into water, its ripples are quietly spreading into the world of cryptocurrency. When the stability and predictability of the world's most important central bank are challenged, no digital asset, from Bitcoin to altcoins, can remain unaffected. This article will delve into the potential impact of this controversy on the crypto space from five key perspectives.

The Root Cause: A Long-standing Challenge to Fed Independence

This dispute did not erupt overnight. For a long time, Trump has expressed dissatisfaction with the Federal Reserve's independent decisions, particularly its monetary policy. You can think of the Fed as an independent economic 'referee' whose job is to maintain a healthy economy by adjusting interest rates (raising or lowering them) to prevent overheating or recession. Trump has repeatedly criticized the Fed, arguing that its tightening policies (like rate hikes) have restricted economic growth, and has continuously pressured it to adopt more accommodative policies.

This time, the executive branch has taken a judicial route, directly petitioning the Supreme Court to remove Federal Reserve Governor Lisa Cook, who was appointed by a previous administration. This marks a significant escalation in the conflict. The move has sparked widespread concern in the markets that the Fed's independence could be compromised. A central bank susceptible to political interference would have unpredictable policies, creating immense uncertainty for the global economy.

The Legal Clash: Executive Power vs. Central Bank Independence

The focal point of this event is an emergency application filed by the U.S. government with the Supreme Court in September 2025. The core request is to overturn a lower court's ruling and allow the president to remove Governor Cook while a lawsuit against her is pending. The Trump administration's stated reason is that Cook allegedly engaged in misconduct in past mortgage applications, arguing this constitutes a legitimate reason for 'removal for cause'.

However, Cook's side vehemently denies all allegations, believing the real reason for the removal attempt is her monetary policy stance, which differs from the administration's. Previously, both the federal district court and the court of appeals in Washington, D.C., ruled that Cook could remain in her position until the case is concluded. Now, with the U.S. government bringing the case to the Supreme Court, this legal battle over the limits of presidential removal power and the tenure protection of Fed governors has reached a decisive stage. This unprecedented confrontation not only tests the U.S. legal system but also has global markets holding their breath, watching for its profound impact on the principle of central bank independence.

Rising Safe-Haven Demand: The 'Digital Gold' Narrative for Crypto Assets

Turmoil in the traditional financial system often triggers a 'flight to safety' among investors. Historically, gold has long served as a safe-haven asset due to its scarcity and independence from any sovereign credit. In recent years, some crypto assets, led by Bitcoin, have also begun to be labeled as 'digital gold' by some.

The logic behind this narrative is that Bitcoin has a hard cap of 21 million coins, a design that gives it anti-inflationary potential and scarcity. When people doubt the long-term stability of the fiat currency system (especially the U.S. dollar system, the world's reserve currency)—for instance, fearing that a central bank might print excessive money under political pressure—capital may seek alternative stores of value. Therefore, an attack on the Fed's independence could objectively enhance the appeal of Bitcoin as an alternative asset that transcends sovereign credit systems.

Shifting Regulatory Winds: The Potential Impact of Personnel Changes on Crypto Policy

The Federal Reserve is not only a monetary policymaker but also plays a crucial role in the U.S. financial regulatory system. The composition and policy leanings of its senior officials can directly influence the regulatory stance on cryptocurrencies and digital assets. This removal controversy highlights the significant potential impact of personnel changes on regulatory policy.

In fact, signs of a shifting regulatory landscape are already apparent. For example, in April 2025, the Fed rescinded guidance that required banks to obtain supervisory approval before engaging in new crypto-related activities. Then, in August of the same year, it announced the termination of the 'Novel Activities Supervision Program,' established in 2023 to enhance oversight of banks' crypto operations. These moves have been interpreted by the market as signals of a softening stance from regulators toward the crypto industry. A more friendly or a stricter regulatory environment could emerge with changes in the Fed's leadership. For the entire industry, a stable and clear regulatory framework is a key prerequisite for its maturation and long-term development.

Future Outlook: Seeking Clarity Amidst Uncertainty

Faced with various uncertainties in the macroeconomic environment, the most important thing for observers and learners is to remain rational and continue learning. Instead of speculating on short-term market trends, it is better to deeply understand the core value and operational logic behind different crypto assets.

For example, it is crucial to clearly distinguish between Bitcoin's 'store of value' logic and the 'medium of exchange' function of stablecoins. Bitcoin's value is rooted in its decentralized network consensus and fixed supply, while stablecoins (such as those pegged to the U.S. dollar) act as a bridge between the real world and the crypto world, with their credibility and stability highly dependent on the solidity of the real-world financial system (especially the dollar system).

Therefore, continuously monitoring the policy movements of major central banks like the Fed is not for speculation, but for a better understanding of the macroeconomic environment we are in, enabling more prudent and informed judgments amidst the evolution of the global financial landscape. In this rapidly developing field, knowledge is always the most solid foundation. In the process of exploration and learning, choosing reputable and widely recognized platforms and resources is the primary principle for ensuring one's own information security.

Start your safe cryptocurrency journey now

Disclaimer