Minneapolis Fed President Criticized for Comments on Illegal Use of Cryptocurrencies

Minneapolis Federal Reserve President Neel Kashkari has found himself on the wrong end of a backlash after claiming that most cryptocurrency transactions involve drugs or illegal activities.

The comment by the officer, a well-known cryptoskeptic, did not go unchallenged, and several members of the community called him out.

Fed official says crypto is mostly used for illegal activities

Kashkari was at a town hall meeting in Chippewa Falls, Wis., when an audience member asked whether the Fed had the ability to collect data on crypto transactions, since most of them occurred “outside the formal channels”.

While acknowledging that the agency pioneered new data sources to keep abreast of industry events, Kashkari said that despite the recent growth of crypto, legitimate transactions for goods and services using these assets remain rare.

“They don’t pay for goods and services with crypto. It almost never happens, unless people buy drugs or other illegal activities,” Kashkari said.

Interestingly, his comments come just days after the Federal Reserve Bank of Minneapolis controversially suggested that the government should tax or ban crypto assets, including Bitcoin (BTC), to help maintain a deficit in the your budget

Experts refute the claims

After a crypto news account on X reported the comments, it sparked a frenzy of condemnation. Hailey Lennon, a crypto law analyst and former Coinbase regulatory adviser, challenged the Fed’s comments, noting that legitimate crypto projects have state-of-the-art anti-money laundering measures.

He also noted that cash, not cryptocurrency, remains the preferred method of financing illicit activities, adding: “We’ve been fighting this false narrative for a decade.”

Investor Nic Carter echoed the sentiments. In a series of posts on X, he criticized Kashkari’s views as ill-informed, citing a previous Chainalysis report that found that only 0.34% of all crypto transactions in 2023 were related to illegal activities. legal

Carter called out the Fed official for neglecting those facts, saying, “I think he’s wrong so it should be illegal.” He also shared a link to Stripe’s $1.1 billion acquisition of Bridge, a stablecoin payments platform, as further evidence of the growing legitimacy of digital assets.

Several other commentators were also not holding back, with some accusing Kashkari of spreading misinformation. Others even questioned his ability to hold such a prominent position.

“At the very least, being this ignorant should disqualify him from a high-profile finance job,” Dave Weisberger said.

The head of the Minneapolis Fed also addressed the issue of central bank digital currencies, suggesting there was nothing a CBDC could do that payment systems like Venmo or PayPal couldn’t do.

He also stated that there was no evidence that a digital dollar would help solve the problems facing the unbanked and underserved in the United States.

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