Nic Carter Rebukes Fed President Neel Kashkari for Misleading Crypto Remarks

Nic Carter Rebukes Fed President Neel Kashkari for Misleading Crypto Remarks

Venture capitalist Nic Carter has taken aim at Minneapolis Federal Reserve President Neel Kashkari for his recent remarks claiming that cryptocurrency is “almost never” used outside of illicit activities, despite data suggesting otherwise.

In a post on X (formerly Twitter) on October 22, Carter sharply criticized Kashkari’s comments, stating, “Being this wrong should be illegal.” Carter expressed concern that such misinformation was coming from one of the world’s top ten financial regulators.

Following his post, Carter shared several data sources that contradict Kashkari’s statements, including a report from blockchain analytics firm Chainalysis. The report found that in 2023, only 0.34% of all cryptocurrency transactions were linked to illegal activity. This figure is a significant decrease from the peak of 1.29% in 2019.

Kashkari made his controversial remarks during a town hall event hosted by the Chippewa Falls Area Chamber of Commerce in Wisconsin on October 21. He argued that “very few transactions” were actually occurring using cryptocurrency, and when they did, it was largely for illegal purposes. “They’re not paying for goods and services using crypto. It almost never happens unless people are buying drugs or other illegal activities,” Kashkari said.

However, studies paint a different picture. A recent report by Crypto ISAC highlighted that cash remains the preferred financial tool for criminal activities. While cryptocurrencies have been implicated in high-profile crimes such as exchange collapses and thefts, the actual volume of illicit crypto transactions is relatively small. In comparison, the estimated global volume of money laundered annually through traditional financial systems is between 2% and 5% of global GDP, amounting to $800 billion to $2 trillion. Of that, only 0.34% involves cryptocurrency transactions. The U.S. Treasury has echoed these findings, noting that cash continues to dominate as the favored method for money laundering due to its anonymity, stability, and widespread use.

Kashkari’s negative stance on cryptocurrency is not new. In February 2024, he criticized Bitcoin, labeling it a risky asset with little to no real-world application and questioning its effectiveness as an inflation hedge.

In a paper published on October 17, the Minneapolis Federal Reserve further urged governments to consider either banning Bitcoin or implementing a tax on it as a means of maintaining permanent fiscal deficits.