Coin World Report:
Neel Kashkari, President of the Minneapolis Federal Reserve, found himself in the wrong when he stated that most cryptocurrency transactions involve drugs or illegal activities.
The comments of this cryptocurrency official were challenged by skeptics, and several community members called him out on it.
Federal Reserve officials have expressed that cryptocurrencies are primarily used for illegal activities. Kashkari made these remarks at a meeting in the City Hall in Chippewa Falls, Wisconsin, when an audience member asked if the Fed had the capability to gather data on cryptocurrency transactions, as most of them occur “outside of formal channels.”
Kashkari acknowledged that the institution is exploring new sources of data to keep up with the industry’s development, but he stated that despite the recent growth of cryptocurrencies, legitimate transactions using such assets for goods and services are still rare.
“They don’t use cryptocurrencies to pay for goods and services. This hardly ever happens unless people are buying drugs or engaging in other illegal activities,” Kashkari said.
Interestingly, his comments came just days after the Minneapolis Federal Reserve Bank sparked controversy by suggesting that the government should tax or ban cryptocurrencies, including Bitcoin (BTC), to help address the budget deficit.
Following the report of these remarks on a cryptocurrency news account on X, there was a frenzy of condemnation. Hailey Lennon, a cryptocurrency legal analyst and former regulatory advisor at Coinbase, questioned the Fed’s comments, highlighting that legitimate cryptocurrency projects have state-of-the-art anti-money laundering measures.
She also pointed out that cash, not cryptocurrency, remains the preferred method for funding illegal activities, adding, “We’ve been fighting this false narrative for a decade.”
Investor Nic Carter agreed with this perspective. In a series of posts on X, he criticized Kashkari’s views as incorrect, citing past reports by Chainalysis which found that only 0.34% of all cryptocurrency transactions in 2023 were related to illegal activities.
Carter accused the Fed officials of ignoring these facts, stating, “I think this kind of misinformation should be illegal.” He also shared a link to Stripe’s $1.1 billion acquisition of Bridge, a stablecoin payment platform, further demonstrating the legitimacy of digital assets’ growing presence.
Several other commentators did not hold back, with some accusing Kashkari of spreading false information. Others even questioned his ability to hold such a high-profile position.
Dave Wesselberg said, “At the very least, such ignorance should disqualify him from a high-profile financial job.”
The President of the Minneapolis Federal Reserve Bank also touched on the topic of central bank digital currencies, stating that central bank digital currencies can do things that payment systems like Venmo or PayPal cannot.
He also claimed that there is no evidence to suggest that a digital dollar would help address the issues faced by the unbanked and underbanked population in the United States.