Venture capitalist Nic Carter has criticized Minneapolis Federal Reserve President Neel Kashkari for his recent comments on cryptocurrency, stating that it is “almost never” used outside of criminal activity. In a post on Oct. 22, Carter expressed his disbelief at Kashkari’s remarks, calling them “unfortunate” and stating that being so wrong should be illegal. Carter backed up his argument by citing data from blockchain data firm Chainalysis, which found that only 0.34% of all crypto transactions in 2023 were connected to illegal activity.
Kashkari made these comments at a Wisconsin Town Hall event, where he claimed that very few transactions actually occur in crypto for legitimate purposes. He asserted that the majority of crypto transactions are related to illegal activities such as buying drugs. However, Carter’s data contradicts this claim, showing that illicit transactions in crypto peaked in 2019 at just 1.29%.
Despite high-profile cases of cryptocurrency being used for criminal activities, such as money laundering and theft, the actual percentage of illicit transactions remains relatively small. Cash continues to be the preferred financial tool for criminals, with estimates suggesting that 2% to 5% of global GDP is laundered annually, primarily through traditional financial channels.
Kashkari’s negative stance on cryptocurrency is not new, as he previously stated that Bitcoin is a risky asset with no practical use in real economic scenarios. The Minneapolis Fed even published a paper in October urging governments to consider banning Bitcoin or implementing a tax on the cryptocurrency to maintain deficits.
Overall, the debate between Nic Carter and Neel Kashkari highlights the ongoing discussion surrounding the use of cryptocurrency in criminal activities and its potential impact on the global financial system. As the industry continues to evolve, it is essential for regulators and stakeholders to consider all perspectives and data before making sweeping statements about the nature of crypto transactions.