White House and Fed in Ongoing Talks on Interest Rate Policy

As regulatory discussions around digital assets gain momentum in the United States, two key developments highlight the growing intersection between policymakers and the crypto industry. White House economic advisor Kevin Hassett has revealed ongoing meetings with Federal Reserve Chairman Jerome Powell, underscoring the administration’s interest in influencing monetary policy amid debates over interest rates. Meanwhile, stablecoin issuer Tether has engaged with lawmakers to help shape federal stablecoin regulations, signaling a shift toward compliance as US officials consider new oversight measures. 

White House Advisor Kevin Hassett Confirms Regular Meetings with Fed Chair Jerome Powell Amid Interest Rate Uncertainty

The White House’s influence over US monetary policy has once again come into focus following the revelation that Kevin Hassett, director of the National Economic Council and a key economic advisor to former President Donald Trump, is holding regular meetings with Federal Reserve Chairman Jerome Powell. Hassett confirmed this during a recent interview on CBS’ Face The Nation, emphasizing that while Powell remains independent, the president’s views on monetary policy should be acknowledged.

The disclosure comes at a critical moment as interest rate policies remain a contentious issue, with the Federal Reserve facing mounting pressure to adjust its stance in response to economic uncertainties and persistent inflationary concerns.

During his appearance, Hassett was asked if these meetings aimed to pressure Powell into lowering interest rates. In response, he noted the Fed’s independence while also asserting that the president’s opinions should carry weight in monetary policy discussions.

“Jerome Powell is an independent person. The Federal Reserve’s independence is respected. The point is the president’s opinion can also be heard — he is the president of the United States,” Hassett stated.

Hassett pointed to a 40 basis point reduction in 10-year Treasury yields as evidence that financial markets anticipate declining inflation. This assertion suggests that the White House believes its economic policies are fostering a more stable long-term economic environment, despite broader concerns about inflation and economic growth.

The Trump administration had previously criticized the Federal Reserve for its monetary tightening policies, arguing that higher interest rates could stifle economic growth and impact investment sentiment. Lower interest rates are traditionally seen as a stimulus for economic expansion, making borrowing cheaper and incentivizing investment in equities, cryptocurrencies, and other risk-on asset classes.

Despite the Trump administration’s push for lower interest rates, Powell and the Federal Reserve have adopted a more measured approach. In his testimony before the Senate Banking Committee on Feb. 11, 2025, Powell indicated that the Fed is in no rush to lower rates, citing concerns over inflation and financial stability.

“We do not need to be in a hurry to adjust interest rates,” Powell stated, casting doubt on the likelihood of rate cuts in 2025.

The Fed’s stance aligns with the latest Consumer Price Index (CPI) report, released by the US Bureau of Labor Statistics on Feb. 12, 2025. The report showed that annual inflation reached 3% in January, exceeding expectations by 0.1%. While the increase was modest, it reinforced the Fed’s caution, as persistently high inflation could complicate monetary policy decisions.

Following the CPI release, Bitcoin experienced a sharp correction, falling below $95,000 as traders braced for a prolonged high-rate environment. The broader cryptocurrency market also saw increased volatility, reflecting the close correlation between monetary policy and digital asset prices.

Market Expectations and Investor Sentiment

While the White House appears to favor lower interest rates, financial markets remain skeptical about imminent rate cuts. According to the Chicago Mercantile Exchange’s (CME) FedWatch tool, only 3% of market participants believe that the Federal Reserve will cut interest rates by 25 basis points at its next policy meeting in March 2025.

This aligns with Powell’s cautious approach and suggests that investors are preparing for a prolonged period of higher borrowing costs. Higher interest rates typically reduce liquidity in financial markets, making riskier assets like cryptocurrencies less attractive to institutional investors.

Despite this, some analysts argue that if inflation begins to cool in the second half of 2025, the Fed could reassess its stance and move toward gradual rate reductions. Such a shift would likely boost demand for Bitcoin and other cryptocurrencies, as lower interest rates generally support risk-on investments.

The Federal Reserve’s interest rate decisions will have far-reaching consequences beyond cryptocurrency markets. Persistently high inflation and global macroeconomic risks—including a looming trade war—are weighing on investor confidence, further complicating the economic outlook.

Key takeaways from the current economic landscape:

• The White House, under Trump’s administration, has expressed a preference for lower interest rates to support economic growth.

• Federal Reserve Chairman Jerome Powell remains cautious about rate cuts, citing inflation concerns.

• The 3% inflation rate in January 2025 exceeded expectations, prompting Bitcoin to drop below $95,000.

• The CME FedWatch tool suggests that rate cuts in March 2025 are highly unlikely, with only 3% of traders expecting a reduction.

While the debate over monetary policy continues, the relationship between the White House and the Federal Reserve remains a focal point for investors. Any shift in policy could have major implications for financial markets, interest rates, and the broader economy.

The revelation that Kevin Hassett is meeting regularly with Jerome Powell shows the ongoing tension between the White House and the Federal Reserve over interest rate policy. While Trump’s administration pushes for more accommodative monetary policies, Powell’s Fed is signaling that inflation remains a primary concern—delaying any immediate rate cuts.

For crypto investors, this uncertainty presents a double-edged sword. While lower interest rates would provide a bullish catalyst for Bitcoin and other risk assets, inflationary pressures and cautious Fed policies could keep markets volatile in the coming months.

The financial world will now closely monitor upcoming Federal Reserve meetings for any signs of a policy shift. Until then, investors may need to brace for continued uncertainty in both traditional and digital asset markets.

Tether Engages with US Lawmakers to Shape Stablecoin Regulations Amid Growing Industry Scrutiny

Stablecoin giant Tether (USDT) is actively engaging with US lawmakers to influence the regulatory framework surrounding digital dollar-pegged assets. According to Fox Business reporter Eleanor Terrett, Tether is working with Congressmen Bryan Steil and French Hill to provide input on the STABLE Act of 2025, a landmark piece of legislation aimed at regulating stablecoin issuers at the federal level.

Additionally, Tether CEO Paolo Ardoino revealed that the company is also providing input on two other stablecoin-related bills, emphasizing the firm’s commitment to working within US financial regulations. This marks a significant shift in Tether’s regulatory approach as the company faces increasing pressure to ensure its stablecoin remains compliant with global financial standards.

Tether, the world’s largest stablecoin issuer with a circulating supply exceeding $90 billion, has long faced scrutiny over its transparency and regulatory compliance. However, Ardoino’s comments indicate that Tether is willing to adapt to US legislation rather than risk regulatory exclusion.

“We are not going to just throw in the towel and let Tether die just for the sake of not adapting to US legislation,” Ardoino told Fox Business. “But there is still a lot of uncertainty over what’s actually going to happen, and we want our voice to be heard in the legislative process.”

As part of the proposed regulations, Tether may be required to:

• Conduct monthly reserve audits through a US-based accounting firm.

• Ensure one-to-one asset collateralization for all tokenized fiat equivalents.

• Provide transparency regarding reserve backing and corporate governance.

Such measures would align Tether with US financial reporting standards, making it more attractive to institutional investors and potentially opening the door for wider mainstream adoption.

The Stablecoin Transparency and Accountability for Banking and Law Enforcement (STABLE) Act of 2025, introduced by Congressmen Bryan Steil and French Hill, aims to establish clear rules for stablecoin issuers operating in the United States.

While specific details of the legislation remain under discussion, the bill is expected to address key concerns, including:

• Reserve backing requirements to prevent insolvency risks.

• Regulatory oversight by federal agencies such as the SEC and the Federal Reserve.

• Clear legal definitions for stablecoin issuers, distinguishing them from banks and money transmitters.

For Tether, this regulatory clarity could help legitimize its operations in the US market, reduce legal risks, and strengthen investor confidence in USDT as a reliable and fully backed stablecoin.

Beyond legislative efforts, stablecoins have become a key focus for the Federal Reserve, as central bankers assess their role in preserving the dominance of the US dollar in global finance.

Federal Reserve Governor Christopher Waller, in a Feb. 6 interview, expressed a cautiously optimistic stance on stablecoins, stating that US-pegged digital assets could strengthen the dollar’s role as the world’s reserve currency.

“Stablecoins will broaden the reach of the dollar across the globe and make it even more of a reserve currency than it is now,” Waller stated.

Stablecoin issuers like Tether and Circle (USDC) are among the largest purchasers of US government debt, holding billions of dollars in US Treasuries as collateral for their tokens. This dynamic boosts demand for the dollar and reinforces its dominance in global capital markets.

However, Waller also acknowledged concerns over stablecoin risks, particularly depegging events and market fragmentation. His remarks indicate that while the Federal Reserve sees potential benefits in stablecoins, policymakers still grapple with how to regulate them without destabilizing financial markets.

A Political and Regulatory Crossroads

Tether’s proactive engagement with Congress and US financial regulators comes at a time of heightened political interest in stablecoins. The Trump administration has pushed for bringing stablecoin operations onshore, aligning with efforts to establish the US as a global leader in blockchain-based financial services.

Meanwhile, the Securities and Exchange Commission (SEC) has been increasing scrutiny over crypto-related businesses, with industry executives meeting regulators to navigate the evolving compliance landscape.

For Tether, aligning with US regulations could provide both opportunities and challenges:

Opportunities:

• Increased institutional adoption in regulated markets.

• Potential expansion into traditional banking and financial services.

• Improved stability and market confidence in USDT.

Challenges:

• Increased operational costs associated with compliance.

• Greater regulatory oversight, which may limit Tether’s operational flexibility.

• Potential legal hurdles, especially if new laws force stablecoin issuers to comply with banking regulations.

Tether’s willingness to engage with US lawmakers marks a pivotal moment for stablecoin regulation. If successful negotiations lead to clear regulatory guidelines, Tether could cement its status as a globally compliant digital dollar alternative—a crucial step in bridging the gap between traditional finance and crypto.

However, regulatory uncertainty remains a major risk. If the STABLE Act imposes stringent banking regulations on stablecoin issuers, firms like Tether may need to restructure their entire operational model to remain compliant.

As the debate unfolds, the crypto industry will be watching closely to see how stablecoin regulations evolve—and whether the US embraces stablecoins as a pillar of its financial future or subjects them to rigid controls that could stifle innovation.

Regardless of the outcome, one thing is clear: stablecoins are no longer an afterthought in Washington—they are now a central issue in the future of US financial policy.