Coin World News Report:
Neel Kashkari, the President of the Federal Reserve Bank of Minneapolis, found himself on the wrong side of a backlash after suggesting that most cryptocurrency transactions involve drugs or illegal activities.
The comments from this well-known cryptocurrency official were met with skepticism and challenged by several members of the community.
The Federal Reserve official stated that cryptocurrencies are primarily used for illegal activities. Kashkari made these remarks during a town hall meeting in Chippewa Falls, Wisconsin, when an audience member asked if the Federal Reserve had the capability to collect data on cryptocurrency transactions, as most of them occur “off the books.”
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 involving goods and services using such assets are still rare.
“They’re not using cryptocurrencies to pay for goods and services. This almost never happens unless people are buying drugs or engaging in other illegal activities,” Kashkari said.
Interestingly, his comments came just days after the Federal Reserve Bank of Minneapolis sparked controversy by suggesting that the government should tax or ban cryptocurrencies, including Bitcoin (BTC), to help maintain budget deficits.
After a cryptocurrency news account reported on these remarks, it triggered a frenzy of condemnation. Hailey Lennon, a cryptocurrency legal analyst and former regulatory advisor at Coinbase, questioned the Federal Reserve’s comments, highlighting that legitimate cryptocurrency projects have advanced anti-money laundering measures.
She also pointed out that cash, not cryptocurrencies, remains the preferred method of funding illegal activities, stating, “We’ve been fighting this false narrative for a decade.”
Investor Nic Carter agreed with this sentiment. In a series of posts on X, he criticized Kashkari’s views as misguided, citing past reports from Chainalysis that found only 0.34% of all cryptocurrency transactions were related to illegal activities in 2023.
Carter accused the Federal Reserve 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 misinformation. Others even questioned his ability to hold such a prominent office.
Dave Weisberg said, “At the very least, such ignorance should disqualify him from holding a high-profile financial job.”
The President of the Federal Reserve Bank of Minneapolis 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.
