Neel Kashkari: "Drugs and Illegal Activity Are The Only Types Of Transactions Used With Crypto." Internet Bites Back

The President of the Minneapolis Federal Reserve, Neel Kashkari, has recently been under fire for his comment that crypto are mainly used for illegal activities.

During his speech at the Wisconsin Town Hall event Kashkari said,

"They're not paying for goods and services using crypto, it almost never happens unless people are buying drugs or other illegal activities"

President of the Minneapolis Federal Reserve, recently voiced his skepticism about cryptocurrencies, stating that most crypto transactions are tied to illegal activities such as drug deals. Speaking at a town hall in Wisconsin, Kashkari remarked, “Very few transactions happen on crypto, unless it’s drugs or illegal activity.”

This is not the first time Kashkari has expressed his doubts about digital assets; since taking office as the Minneapolis Fed President in 2016, he has been openly critical of cryptocurrencies.

In 2022, Kashkari harshly criticized the industry, referring to it as largely filled with “fraud, hype, and noise.” Earlier this year, he questioned Bitcoin’s utility, arguing that it fails to serve as either a currency or an investment, likening it instead to speculative assets such as Beanie Babies.

Crypto community pointing out Kashkari’s bias

It didn't take long for the internet to react to Kashkari's comments,with many netizens using data and stats to point out the inaccuracies and biases in Kashkari's statement.

Hailey Lennon, a legal analyst and crypto advocate took Twitter to purport that contrary to Kashkari's beliefs and popular beliefs, traditional cash is far more frequently used for illicit transactions. She also added that legitimate crypto projects often have robust anti-money laundering measures in place to curb illegal uses.

According to a Jan.18 report from Chainalysis, only 0.34% of all crypto transactions in 2023 were linked to illegal activity. The peak for illicit crypto transactions happened in 2019, yet only accounted for just 1.29% of total transactions over the past six years.

Nic Carter, a partner at Castle Island Ventures, also responded on X saying, “I think being this wrong should be illegal.”

Kashkari's reflecting the Fed's skepticism of Bitcoin

Kashkari's comments were made not long after the Minneapolis Fed suggested that assets like Bitcoin should either be taxed or banned to help government manage budget deficits. Similar to Kashkari, Minneapolis Feds sees Bitcoin as an example of a fix-supply "private-sector security" that lacks "real resource claims."

Hence, the Minneapolis came out with a plan to either ban Bitcoin outright or impose tax on it to restore the feasibility of managing permanent primary deficits.

In May, Kashkari also dismissed vcrypto and central bank digital currencies as a bunch of handwaving world salads, claiming that they offer no advantages over existing payments solutions like Venmo. His disdain for the sector dates back even further as he previously compared Bitcoin to a "giant garbage dumpster" and called Dogecoin a "Ponzi scheme."

Growing interest in digital assets

Contrary to Kashkari’s comments, recent data points to growing mainstream interest in digital assets. A 2023 Pew Research Center survey revealed that 17% of Americans have invested in or traded cryptocurrencies.

Furthermore, a 2024 survey by Nickel Digital, a European investment manager, found that 80% of institutional investors and wealth managers plan to increase their exposure to digital assets, a trend driven by the recent approval of spot Bitcoin and Ether ETFs by the U.S. Securities and Exchange Commission.

These findings suggest a broader adoption of cryptocurrencies, despite ongoing criticisms from traditional financial leaders like Kashkari.