Fed President Claims Crypto Is ‘Almost Never’ Used Outside Of Illegal Activity, Gets Schooled By Industry Pundits

Minneapolis Federal Reserve President Neel Kashkari — who once compared Bitcoin to Beanie Babies — on Monday clashed with the crypto community after proclaiming that digital assets are only useful for purchasing drugs and other criminal activities.

Kashkari Is No Friend Of Crypto

Kashkari claims that crypto payments are mostly linked to illegal activity. Speaking at a Wisconsin Town Hall event hosted by the Chippewa Falls Area Chamber of Commerce on Monday, he stated that crypto is used for “very few transactions.” 

“People are buying and selling crypto, but they are not paying for goods and services. It almost never happens, unless people are buying drugs or other illegal activities,” Kashkari told audience members.

The remarks highlight the Fed official’s opposition to crypto, even as institutional adoption of the asset class increases.

Kashkari has long voiced some well-worn, poisonous criticisms of Bitcoin and the crypto industry in general. In 2020, for instance, he called crypto a “giant garbage dumpster”. And in 2021, he asserted that the crypto industry was predominantly comprised of “fraud, hype, and noise”.

The Crypto Community’s Response

Kashkari’s comments on Monday quickly drew sharp rebuttals from prominent members of the crypto community, who took to X to defend the asset class.

“Legitimate crypto projects in the space have state-of-the-art anti-money laundering policies to prevent this,” Brown Rudnick Partner Hailey Lennon said in response to Kashkari. “We’ve been fighting this false narrative for decades.”

Castle Island Ventures partner Nic Carter also joined the chorus of voices scoffing at Kashkari’s misplaced statements on how cryptocurrencies are utilized. “I think being this wrong should be illegal,” he opined in an Oct. 21 post on X.

Carter further noted that the Fed president’s comments were even more troubling given that he’s ranked among the “top 10 most important financial regulators on the planet.”

Moreover, data shows that Kashkari couldn’t be more wrong. A report by blockchain sleuth Chainalysis earlier this year revealed that just 0.34% of all crypto transactions in 2023 could be tied to any kind of criminal activity.