Minneapolis Federal Reserve President Neel Kashkari sparked backlash after dismissing cryptocurrencies as primarily being used for illicit activities, such as drug deals.
Speaking at a town hall in Wisconsin, Kashkari claimed that “very few transactions are actually happening” in the crypto space, and when they do, they are mostly related to illegal activities like drug trafficking.
“People aren’t using crypto to pay for goods and services,”
Kashkari stated, according to a video shared by the Chippewa Falls Area Chamber of Commerce. He added that crypto is almost exclusively linked to criminal purposes.
Kashkari’s comments quickly drew sharp criticism. Nic Carter, a partner at Castle Island Ventures, took to social media platform X, stating, “Being this wrong should be illegal.” Carter expressed concern that someone with Kashkari’s influence, as one of the “top 10 most important financial regulators on the planet,” could hold such inaccurate views on cryptocurrency.
Hailey Lennon, a partner at the law firm Brown Rudnick, also challenged Kashkari’s assertions, pointing out that legitimate crypto projects follow strict anti-money laundering (AML) measures.
“In reality, physical cash is the primary medium for funding drug trafficking and illegal activities,”
she wrote on X, adding that the crypto industry has been fighting this false narrative for over a decade.
Kashkari, who has led the Federal Reserve Bank of Minneapolis since 2016, has long been a vocal critic of cryptocurrencies. He previously compared the digital asset market to a “giant garbage dumpster” and derided the proliferation of “thousands of garbage coins” during a 2021 conference.
The controversy over Kashkari’s comments comes as the debate over the role of cryptocurrencies in the financial system intensifies. Former VanEck advisor Gabor Gurbacs recently added to the discussion by suggesting that the Federal Reserve could consider adopting Bitcoin as a hedge against its policies. This proposal followed U.S. Senator Cynthia Lummis’s idea at the Bitcoin 2024 Nashville conference, where she advocated for converting surplus reserves from Federal Reserve banks into Bitcoin over the next five years.
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