“Very Few Transactions Happen on Crypto, Unless it’s Drugs:” Minneapolis Fed President

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Sujha Sundararajan

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Sujha Sundararajan

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Last updated:

October 22, 2024 06:08 EDT

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Neel Kashkari, president of the Minneapolis Federal Reserve (Fed), said that almost no crypto transactions occur unless they are for drugs or illegal purposes.

Speaking at a town hall in Wisconsin on Monday, Kashkari claimed that cryptos are currency of drug deals.

“Very few transactions happen on crypto, unless it’s drugs or illegal activity.”

In an event hosted by the Chippewa Falls Area Chamber of Commerce, the Fed official said that people buy and sell crypto, but “they are not paying for goods and services.”

Kashkari has had a past of scoffing at Bitcoin and other digital assets, after taking the seat as the president of Minneapolis Fed in 2016.

In 2022, he criticised the industry for mainly comprising “fraud, hype, and noise.”

Early this year, Kashkari questioned Bitcoin’s utility and argued that it cannot function as either a currency or an investment. Additionally, Kashkari dismissed the largest crypto as a tool for speculation, similar to Beanie Babies.

Crypto Proponents Counter Fed President’s Criticisms

Following the Fed president’s remarks on the asset class, crypto pundits took to X, expressing their criticisms. Nic Carter, a partner at Castle Island Ventures, responded to Kashkari’s statement,

“I think being this wrong should be illegal.”

Another crypto proponent and a legal analyst Hailey Lennon said there has been a battle with such false narratives for a decade. She added that drug trafficking and illegal activity funding is usually done in physical cash rather than cryptos.

“Legitimate crypto projects in the space have state of the art anti-money laundering policies to prevent this.”

In addition, data from a recent survey by Pew Research Center indicates that only 17% of Americans invested, traded or owned digital assets in 2023.

Besides, a 2024 poll from European investment manager Nickel Digital reveals that 80% of institutional investors and wealth managers want to increase their investments in digital assets in the coming months. This has gained traction, particularly after the approval of spot Bitcoin and Ether ETFs by the SEC earlier this year.