Neel Kashkari, president of the Minneapolis Federal Reserve, said on Monday (October 21) that cryptocurrency transactions actually rarely occur. He said that Bitcoin is only used to buy drugs and trade in illegal activities. But the blockchain report shows that illegal transactions in cryptocurrencies were only 1.29% at the peak. As the remarks fermented, the cryptocurrency album criticized Kashkari, arguing that committing such measures should be illegal.
“They’re not using cryptocurrencies to pay for goods and services, and that almost never happens unless people are buying drugs or doing other illegal activity,” Kashkari claimed during a speech at a Wisconsin Town Hall event hosted by the Chippewa Falls Area Chamber of Commerce.
He once described Bitcoin as “Beanie Babies,” and now he’s in hot water again for claiming that cryptocurrencies are only used to “buy drugs or other illegal activities,” CoinTelegraph reports.
The comments echoed unsubstantiated claims made in the past by other cryptocurrency skeptics in the U.S. government, and therefore did not cause much reaction on Twitter.
"It should be illegal to make this mistake," Castle Island Ventures partner Nic Carter said in a Twitter response on Tuesday.
He added that Kashkari’s erroneous comments were all the more concerning given that he is one of the “10 most important financial regulators in the world.” Brown Rudnick partner Hailey Lennon also weighed in, criticizing Kashkari’s erroneous comments about how cryptocurrencies are used.
“Legitimate projects in the cryptocurrency space have state-of-the-art AML policies to prevent this, physical cash is the preferred method of funding drug trafficking and illegal activity," she said in a Twitter post. "We’ve been fighting this false narrative for a decade.”
Kashkari is a long-time Bitcoin skeptic and his comments are similar to those of cryptocurrency opponents such as Senator Elizabeth Warren and Representative Brad Sherman, according to reports.
However, blockchain data suggests Kashkari’s claims are false.
A report from blockchain data firm Chainalysis found that only 0.34% of all crypto transactions in 2023 could be linked to any form of illegal activity.
It is worth noting that illegal transactions of cryptocurrencies reached a peak in the past six years in 2019, at only 1.29%.
Kashkari's comments came a day after the Minneapolis Fed recommended taxing or banning assets such as Bitcoin to help governments maintain budget deficits.
In May, he said crypto assets and central bank digital currencies (CBDCs) are “a bunch of hotchpotchs,” adding that digital assets can’t do what modern payment apps like Venmo can’t.
