Nic Carter Critiques Minneapolis Fed President Neel Kashkari's Views on Cryptocurrency

Venture capitalist Nic Carter has openly criticized Minneapolis Federal Reserve President Neel Kashkari for his assertion that cryptocurrency is "almost never" used for legitimate purposes outside of criminal activity. Carter's remarks came in response to Kashkari's comments during a recent town hall event, where he suggested that crypto transactions are primarily associated with illegal activities.

In a post on X (formerly Twitter) on October 22, Carter expressed his disapproval, stating, “being this wrong should be illegal.” He emphasized the significance of Kashkari's position as one of the leading financial regulators, making his comments all the more concerning.

Carter backed his argument by referencing data that contradicts Kashkari’s claims. He highlighted a report from blockchain data firm Chainalysis, which indicated that only 0.34% of all crypto transactions in 2023 were linked to illegal activities. The report noted that the peak of illicit transactions occurred in 2019 at just 1.29%.

During the town hall, Kashkari asserted that "very few transactions were actually happening" in the crypto space and stated, "They’re not paying for goods and services using crypto. It almost never happens unless people are buying drugs or other illegal activities."

Further supporting Carter's critique, a recent study by Crypto ISAC revealed that cash remains the financial tool of choice for criminals. While cryptocurrencies have been associated with high-profile crimes, such as exchange collapses and thefts, the actual volume of illicit transactions in crypto is relatively small. The U.S. Treasury has echoed these findings, confirming that cash continues to be the primary method for money laundering due to its anonymity and widespread acceptance.

Despite the challenges of tracking illicit activity in traditional finance, estimates suggest that between 2% and 5% of global GDP, or $800 billion to $2 trillion, is laundered each year. Of this, only a mere 0.34% involves cryptocurrencies.

Kashkari has been consistent in his skepticism toward cryptocurrencies, having labeled Bitcoin a risky asset in February 2024 and questioned its practical applications in the real economy. On October 17, the Minneapolis Fed also published a paper recommending that governments either ban Bitcoin or impose a tax on it to address their fiscal deficits.

Carter's pushback against Kashkari's remarks reflects a broader debate within the financial community about the role and legitimacy of cryptocurrencies in today's economy.