Waller rises: Small-town professor becomes a top candidate for Federal Reserve Chair, with a probability as high as 30%

Author: Ethan (@ethanzhang_web3), Odaily

Original Title: Probability as High as 30%, Small Town Professor Waller Becomes the Hottest Candidate for Federal Reserve Chair

In the early morning of September 12, East 8th District time, the US federal funds rate market sent a highly explicit signal: the probability that the Federal Reserve will cut rates by 25 basis points at this month's FOMC meeting has reached as high as 93.9%. After five consecutive "holds," the market has finally ushered in a directional shift in monetary policy. Meanwhile, another bet concerning the direction of the Fed over the next two years is quietly advancing: Who will succeed Powell as the next Federal Reserve Chair?

On the decentralized prediction platform Polymarket, as of the same day, current Fed Governor Christopher Waller leads the pack with a 30% probability, ahead of the other two "Kevin faction" contenders—Hassett (16%) and Walsh (15%). However, the market also retains a more dramatic possibility: "Trump will not announce a successor before the end of the year" remains the top probability at 41%.

This series of data shows that the market is betting in two directions simultaneously: one is the now-consensus path of rate cuts, and the other is the still-uncertain contest for the monetary helm. Between these two, Waller's name repeatedly appears in various trading perspectives and policy games.

Why Has the Market Started to "Believe in Waller"?

The story of an "atypical Fed Governor": How did a small-town professor get pushed to the forefront?

Waller's background and resume stand out in the Fed system. He did not come from the Ivy League, nor did he hold key positions at Goldman Sachs or Morgan Stanley; he was born in a small town in Nebraska with a population of less than 8,000. Starting from Bemidji State University, he earned a bachelor's degree in economics. In 1985, he obtained a Ph.D. in economics from Washington State University and began a long academic career, teaching and researching at Indiana University, the University of Kentucky, and the University of Notre Dame for a total of 24 years.

He then spent 24 years in academia researching monetary theory, focusing mainly on central bank independence, tenure systems, and market coordination mechanisms. In 2009, he left academia to join the St. Louis Fed as Director of Research. It wasn't until 2019 that he was nominated by Trump to the Federal Reserve Board of Governors—a nomination process full of controversy and a confirmation that was not smooth. Ultimately, on December 3, 2020, the Senate approved his appointment by a narrow margin of 48:47. Entering the Fed's highest decision-making body at the age of 61, Waller is older than most governors, but this has become an advantage: he has fewer burdens, owes no favors to Wall Street, and having worked at the St. Louis Fed, he knows the Fed is not monolithic—different voices are not only tolerated but sometimes encouraged.

This path allows him to have professional judgment while retaining the freedom to express himself, without being categorized as a spokesperson for any faction. From Trump's perspective, such a person may be easier to "use as is"; in the eyes of the market, such a candidate means "less uncertainty."

However, in a game of power transition intertwined with bureaucracy and political will, Waller is not the kind of candidate naturally favored by the market. His career trajectory is relatively academic and technical, not known for public rhetoric, nor does he frequently appear on financial television.

Yet it is precisely this kind of person who has gradually become the "consensus candidate" frequently mentioned in various market tools and political commentaries. The reason lies in his triple compatibility:

First, his monetary policy style is flexible but not speculative.

Waller is neither a typical "inflation hawk" nor a proponent of monetary easing. He advocates that policy should move with economic conditions: in 2019, he supported preemptive rate cuts to avert recession; in 2022, he favored rapid rate hikes to curb inflation; and in 2025, against the backdrop of economic slowdown and falling inflation, he was among the first Fed governors to vote for rate cuts. This "non-ideological" policy style is particularly scarce in the current highly politicized Fed landscape.

Second, his political relationships are clear, and his technical image is extremely clean.

Waller was nominated by Trump in 2020 as a Fed governor and is one of the few monetary policy officials within the Republican system who can achieve "technical neutrality" and "political compatibility." He is neither seen as "Trump's confidant" nor rejected by the party establishment. This unique middle-ground positioning gives him broader political maneuvering space amid fierce partisan competition.

Unlike Hassett, who has a clear stance and strong factional colors, or Walsh, who has close ties to Wall Street, Waller displays a purer technocratic quality. He is more easily seen as "a trustworthy professional." In the context of highly polarized American politics, this de-ideologized, professionally competent image makes him a stable and easily accepted appointee by all sides.

Third, his attitude toward crypto technology is "tolerant" within the system.

Waller is not a so-called "crypto believer," but he is one of the most vocal people in the Fed system on topics such as stablecoins, AI payments, and tokenization. He does not advocate government-led innovation and opposes CBDC, but supports private stablecoins as tools to improve payment efficiency, proposing that "the government should build the infrastructure like highways, and leave the rest to the market."

Between traditional finance and digital assets, compared to the other two candidates, he may be the only Fed official to clearly send a "public-private collaboration" signal.

Sensitivity and Sense of Timing: He Knows When to Speak and When to Stay Silent

This July, the Fed held its summer FOMC meeting. Although the market generally expected rates to "remain unchanged," the meeting saw a rare scene: Waller and Michelle Bowman, two governors, cast dissenting votes, advocating for an immediate 25 basis point rate cut.

Such "minority dissent" is uncommon within the Fed. The last similar situation occurred in 1993.

Two weeks before the vote, Waller had already expressed his position at a central bank seminar at New York University. His public speech clearly advocated that "current economic data supports moderate rate cuts." On the surface, this was a technical "advance communication"; but in terms of timing, it was a release of political signals. At the time, Trump had a love-hate relationship with Powell, repeatedly attacking him on Truth Social and demanding "immediate rate cuts." Waller's vote and speech neither fully aligned with the president nor provided cover for Powell. He stood perfectly between "policy adjustment" and "technical independence."

In a highly politicized Fed environment, a governor who can strike such a balance and knows when to make a statement appears to have more leadership qualities.

Trump criticizes Powell for "poor and incompetent" performance in managing the construction of the Federal Reserve building

If He Takes Office, How Should the Crypto Market React?

For the crypto market, "who steers the Fed" has never been mere gossip, but a triple reflection of policy expectations, market sentiment, and regulatory pathways. If this time, Waller really becomes the Chair, we need to seriously consider how three types of players will reprice the future.

First, for stablecoin issuers and the compliance track, it is the large-scale opening of a "regulatory dialogue window"

Waller has repeatedly made it clear in speeches that he opposes central bank digital currency (CBDC), saying it "cannot solve the market failures of the current payment system," and instead emphasizes the advantages of private stablecoins (such as USDC, DAI, PayPal USD, etc.) in improving payment efficiency and cross-border settlement. He stresses that regulation should come from "congressional legislation rather than agency overreach," calling for "these new technologies not to be stigmatized."

This means that if he becomes Chair, projects like Circle, MakerDAO, and Ethena may usher in a "period of institutional path certainty," no longer always in the gray area between the SEC and CFTC. More importantly, Waller's philosophy of "market-led, government paving the way" may prompt the Treasury, FDIC, and other supporting agencies to jointly develop a stablecoin regulatory framework, promoting the implementation of policies such as "licensing, reserve standardization, and information disclosure standardization."

Second, for main chain assets like BTC and ETH, it is a "sentiment boost + regulatory easing" mid-term umbrella

Although Waller has not publicly praised bitcoin or ethereum, he stated in 2024: "The Fed should not pick sides for the market." Although brief, this means the Fed will not actively "suppress non-dollar systems" as long as they do not touch the bottom lines of payment sovereignty and systemic risk.

This will provide BTC and ETH with a window of "relatively mild regulatory cycle." Even if the SEC may still question their security attributes, if the Fed does not push for CBDC, does not block crypto payments, and does not intervene in on-chain activities, then market speculation and risk appetite will naturally improve.

Simply put, in the "Waller era," bitcoin may not receive "official endorsement," but will enjoy the natural benefit of "regulatory tailwinds easing."

Third, for developers and DeFi native innovators, it is a rare window of "central bank dialogue partner"

Waller has mentioned "AI payments," "smart contracts," and "distributed ledger technology" on multiple occasions this year, stating: "We may not necessarily adopt these technologies, but we must understand them." This stance is completely different from many regulators who avoid or denigrate crypto technology.

This opens up an extremely important space for developers: not necessarily to be accepted, but at least no longer to be excluded.

From Libra to USDC, from EigenLayer to Visa Crypto, generations of developers and central bank regulators have been stuck in an "awkward parallel universe." If Waller takes office, the Fed may become the first central bank leader "willing to talk to DeFi natives."

In other words, crypto developers may usher in a starting moment for "policy negotiation rights" and "financial discourse power."

Conclusion: Prediction Markets Price the Future, Chair Candidates Price the Direction

Whether "Waller will be the new Chair" is still undetermined. But the market has already started trading on "how he would price the future if he became Chair." And the prediction market's 31% bet on him continues to climb, far surpassing his competitors.

At this juncture, what is certain is that rate cut expectations are moving toward realization; the crypto industry is seeking a policy breakthrough; and dollar assets are in a global "US Treasury issuance increase – high interest rates – risk appetite recovery" triangular game. As a "successor" who is politically acceptable, policy predictable, and market-imaginable, Waller naturally becomes the focus of bets.

But perhaps there is another topic worth watching: If he ultimately does not become Fed Chair, how will the market readjust these expectations? And if he really takes office—perhaps the "next-generation dollar system" ranking race is just beginning.