Minneapolis Federal Reserve President Neel Kashkari — who once likened Bitcoin to Beanie Babies — landed in hot water again after perpetuating a claim that crypto is only useful for “buying drugs” or “other illegal activities.”
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, adding:
“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.
Source: Nic Carter
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.
“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) 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%.
Illicit transactions as a share of total crypto transactions have only ever been as high as 1.29% since 2018. Source: Chainalysis
Related: Stablecoins can benefit financial system, Fed governor says
Kashkari’s comments came 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.
In February 2020, he likened Bitcoin and the broader crypto market to a “giant garbage dumpster” and later described Dogecoin (DOGE) as nothing more than a Ponzi scheme.
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