Minneapolis Federal Reserve President Neel Kashkari — who once likened Bitcoin to Beanie Babies — has landed himself in hot water again after perpetuating a claim that Crypto Pundits Slam is only useful for “buying drugs” or “other illegal activities.”
In the ever-evolving world of cryptocurrency, opinions and predictions from influential figures can have a significant impact on market sentiment and investor behavior. Recently, Neel Kashkari, the President of the Federal Reserve Bank of Minneapolis, made headlines with his comments on cryptocurrencies, drawing sharp criticism from prominent figures within the crypto community.
Kashkari’s remarks, which were perceived as dismissive and ill-informed, sparked a wave of backlash, with many crypto pundits arguing that his views were not only incorrect but potentially harmful to the industry.
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Speaking at a Wisconsin Town Hall event hosted by the Chippewa Falls Area Chamber of Commerce, Kashkari claimed “very few transactions were actually happening” in crypto, claiming:
“They’re not paying for goods and services using crypto […] It almost never happens unless people are buying drugs or other illegal activities.”
The comment, which echoes unsubstantiated claims from other crypto skeptics in government in the past, didn’t go down well on X.
“Being this wrong should be illegal,” Castle Island Ventures partner Nic Carter said in an Oct. 22 response on X.
Carter added that Kashkari’s misinformed comments were even more worrisome considering that he’s counted among the “top 10 most important financial regulators on the planet.”
Brown Rudnick Partner Hailey Lennon added her voice to the mix, criticizing Kashkari’s misplaced comments on how cryptocurrencies are used.
Kashkari’s comments come at a time when the cryptocurrency market is experiencing significant growth and increased mainstream acceptance.
Major financial institutions, corporations, and even governments are beginning to recognize the potential of cryptocurrencies and blockchain technology. Against this backdrop, Kashkari’s dismissive remarks have been seen as out of touch and misguided by many within the crypto community.
“Legitimate crypto projects in the space have state-of-the-art anti-money laundering policies to prevent this. Physical cash is the preferred method for funding drug trafficking and illegal activity,” she said in an Oct. 22 post to X.
“We’ve been fighting this false narrative for a decade.”
Kashkari is a long-term Bitcoin BTC$67,615 skeptic, and his comments are similar to ones made by crypto naysayers such as Senator Elizabeth Warren and Congressman Brad Sherman.
However, blockchain data suggests the Fed president is wrong.
A Jan. 18 report from blockchain data firm Chainalysis found that just 0.34% of all crypto transactions in 2023 could be linked to any kind of illegal activity.
Notably, illicit transactions in crypto peaked in the last six years in 2019 at just 1.29%.
Kashkari’s comments just one day after the Federal Reserve Bank of Minneapolis suggested that assets such as Bitcoin should be taxed or banned to help governments maintain deficits on their budgets.
In May, he said crypto assets and central bank digital currencies (CBDCs) were a “bunch of handwaving world salad,” adding that digital assets can’t do anything modern payment apps like Venmo can’t already.
As the crypto market continues to evolve, it is likely to face new challenges and opportunities. The development of new technologies, such as decentralized finance (DeFi) and non-fungible tokens (NFTs), is opening up new possibilities and use cases for cryptocurrencies. At the same time, the industry will need to address ongoing concerns about regulation, security, and scalability.
In February 2020, he likened Bitcoin and the wider crypto market to a “giant garbage dumpster” and later described Dogecoin DOGE$0.1458 as nothing more than a Ponzi scheme.
