Fed’s Neel Kashkari Faces Backlash Over Misguided Crypto Comments

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Neel Kashkari, President of the Minneapolis Federal Reserve, sparked outrage in the cryptocurrency community after claiming that crypto is primarily used for illegal activities, such as buying drugs. Speaking at a Wisconsin Town Hall event, Kashkari suggested that “very few transactions” happen in crypto, except for illicit purposes. This statement echoes similar claims from crypto skeptics in government, but it didn’t sit well with many industry insiders.

Castle Island Ventures partner Nic Carter quickly took to X to criticize Kashkari’s views. “Being this wrong should be illegal,” Carter remarked on October 22, highlighting the concern that one of the “top 10 most important financial regulators on the planet” holds such misinformed opinions.

Industry Experts Push Back

Crypto legal expert Hailey Lennon, a partner at Brown Rudnick, also voiced her frustration with Kashkari’s comments, calling them “misplaced.” In a post on X, Lennon pointed out that legitimate crypto projects employ state-of-the-art anti-money laundering measures to prevent illegal activity. She further argued that physical cash remains the preferred method for drug trafficking and other crimes, adding that the crypto industry has fought this false narrative for a decade.

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Blockchain data contradicts Kashkari’s assertions. According to a January 2023 report from blockchain analytics firm Chainalysis, only 0.34% of crypto transactions in 2023 were linked to illegal activity. The highest recorded percentage in the past six years was in 2019, peaking at just 1.29%.

Misinformation from Kashkari

Kashkari’s comments come as no surprise to those familiar with his long-standing skepticism toward Bitcoin and the broader crypto market. Just a day prior to his remarks, the Federal Reserve Bank of Minneapolis released a statement suggesting that Bitcoin should be taxed or even banned to help governments address budget deficits.

In May 2024, Kashkari dismissed digital assets and central bank digital currencies (CBDCs) as nothing more than “handwaving world salad,” stating that they offer nothing new compared to modern payment platforms like Venmo. His disdain for crypto dates back even further, to February 2020, when he infamously called Bitcoin a “giant garbage dumpster” and labeled Dogecoin a Ponzi scheme.