Minneapolis Fed President Kashkari Issues Scathing Critique of Cryptocurrencies

Minneapolis Federal Reserve President Neel Kashkari recently made striking comments about cryptocurrencies that garnered widespread attention on social media. Speaking at an event organized by the Chippewa Falls Chamber of Commerce, Kashkari claimed that cryptocurrencies are predominantly used for illegal activities. He stated, "People aren’t buying goods and services with crypto... That hardly ever happens unless they're engaged in drugs or other illegal activities," sparking reactions from many within the industry.

Strong Reaction from the Crypto Community Nic Carter, a partner at Castle Island Ventures, criticized Kashkari's statements as "misleading and worrisome," pointing out the problem of such misassessments coming from an influential economic authority. Hailey Lennon from Brown Rudnick highlighted that crypto projects typically implement complex anti-money laundering measures, emphasizing that physical cash is still more preferred for illegal transactions. A report by Chainalysis published in January indicated that only 0.34% of crypto transactions in 2023 were linked to illegal activities.

Coinbase Insistent on Clarity Regarding U.S. Crypto Regulations Beyond this development, U.S. public crypto exchange Coinbase (COIN) has made two separate requests under the Freedom of Information Act (FOIA) to gain more insight into the approach of U.S. regulators toward cryptocurrency companies. Paul Grewal, Coinbase’s chief legal officer, noted that the exchange is seeking clarity from the Federal Deposit Insurance Corporation (FDIC) regarding deposit limits for crypto firms. It is claimed that the FDIC has instructed banks to ensure deposits from crypto firms do not exceed 15% of their total deposits.

This latest move is seen as part of Coinbase's broader strategy to ensure transparency in crypto regulations. In March, the company also established a political action committee called "Stand with Crypto."

Awaiting a New U.S. President for More Transparent Regulations As cryptocurrencies remain a significant topic in the 2024 U.S. presidential elections, candidates in the race showcase distinct differences. Republican candidate Donald Trump has promised to make America the "crypto capital of the world," while Democrat Kamala Harris has remained more reserved on the topic. According to Galaxy Research, Vice President Harris might pursue a more open policy on the crypto sector than President Joe Biden. However, her opponent, former President Trump, has thus far made clearer and more supportive promises for the crypto industry.