Venture Capitalist Nic Carter Criticizes Minneapolis Fed President Neel Kashkari Over Crypto Remarks

Venture Capitalist Nic Carter has publicly criticized Minneapolis Federal Reserve President Neel Kashkari for his comments suggesting that cryptocurrency is “almost never” used outside of illicit activities. Carter argues that the data tells a different story.

Kashkari’s Controversial Remarks

In an X post on October 22, Nic Carter responded to Kashkari’s claims, stating, “being this wrong should be illegal.” Carter highlighted the significance of Kashkari’s position as one of the top ten most important financial regulators globally, making his statements particularly impactful.

Carter supported his criticism by referencing several data sources, including a report from blockchain data firm Chainalysis. The report indicated that only 0.34% of all crypto transactions in 2023 were linked to illegal activities. Moreover, the peak of illicit transactions in crypto was in 2019, at just 1.29%.

Kashkari’s Statements at Wisconsin Town Hall

During an event hosted by the Chippewa Falls Area Chamber of Commerce on October 21, Kashkari claimed that “very few transactions were actually happening” in crypto. He further stated, “They’re not paying for goods and services using crypto. It almost never happens unless people are buying drugs or other illegal activities.”

“I think being this wrong should be illegal.”

Nic Carter (@nic__carter) October 21, 2024

Data Disproving Kashkari’s Claims

A recent study by Crypto ISAC found that cash remains the preferred financial tool for criminals. Although cryptocurrencies have been linked to several high-profile crimes, including exchange collapses and thefts, the actual portion of illicit activity is still significantly small. According to Crypto ISAC, the estimated amount of money laundered globally in one year is 2% to 5% of global GDP, ranging between $800 billion to $2 trillion. In contrast, only 0.34% of the transaction volume consists of cryptocurrencies.

The U.S. Treasury also supports these findings, stating that cash continues to be the primary method for money laundering due to its anonymity, stability, and widespread use.

Kashkari’s Consistent Stance on Cryptocurrency

Kashkari’s negative stance on cryptocurrency is not new. In February 2024, he described Bitcoin as a risky asset with no practical use in real economic scenarios and questioned its effectiveness as a hedge against inflation. On October 17, the Minneapolis Fed published a paper urging governments to either ban Bitcoin or enact a Bitcoin tax to maintain their permanent primary deficits.

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