Fed Reserve ‘Kashkari’ States Crypto is Only Used for Drugs and Illegal Activities

• Minneapolis Federal Reserve President Neel Kashkari dismissed crypto as the currency of drug deals and other criminal enterprises, saying very few transactions are actually happening in crypto unless people are buying drugs or other illegal activities.
• Kashkari has often criticized Bitcoin and cryptocurrencies in the past, comparing the digital asset market to a “giant garbage dumpster” and saying it was overrun with “thousands of garbage coins.”
• Crypto industry supporters pushed back against Kashkari’s remarks, with some arguing that legitimate crypto projects have robust anti-money laundering policies and that the narrative of crypto being used primarily for illicit activities is false.

Minneapolis Federal Reserve President Neel Kashkari dismissed crypto as primarily used for illegal activities during a town hall event in Wisconsin. His comments reflect the skepticism that many regulators have toward cryptocurrencies.

Kashkari Says Crypto Rarely Used for Legal Purposes

At the town hall hosted by the Chippewa Falls Area Chamber of Commerce, Kashkari stated that “very few transactions are actually happening in crypto” and that digital assets are “almost never” used to purchase legal goods and services.

He claimed crypto is mostly used for “buying drugs or other illegal activities.” This echoes similar past comments Kashkari has made criticizing crypto as a “giant garbage dumpster” overrun by “thousands of garbage coins.”

Crypto Industry Pushes Back

In response to Kashkari’s remarks, members of the crypto industry contested his perspective.

Castle Island Ventures partner Nic Carter said “being this wrong should be illegal.” Custodia Bank CEO Caitlin Long and attorney Hailey Lennon also criticized Kashkari’s characterization of crypto, stating that legitimate projects have robust anti-money laundering policies.

Kashkari’s Role as Federal Reserve President

As president of the Federal Reserve Bank of Minneapolis, Kashkari has influence over crypto-related banking regulation in the U.S.

The Federal Reserve system oversees banking nationally and has authority to restrict crypto banking activities. It is also developing a potential central bank digital currency.

Institutional Crypto Adoption Rising

Although Kashkari portrays crypto as a haven for illegal behavior, institutional adoption has increased recently. Crypto-linked exchange-traded funds were approved in the U.S. this year.

Surveys indicate the majority of institutional investors plan to raise crypto allocations. However, crypto ownership remains limited among everyday Americans.