Venture Capitalist Nic Carter has publicly criticized Minneapolis Federal Reserve President Neel Kashkari for his recent statements claiming that cryptocurrency is “almost never” used for legitimate transactions outside of illegal activities, despite contradicting data.
On October 22, Carter expressed his disbelief on social media, noting that such inaccuracies should not be permissible, especially from someone in Kashkari’s influential position as a leading financial regulator.
To substantiate his argument, Carter cited data from blockchain analytics firm Chainalysis, which revealed that a mere 0.34% of all cryptocurrency transactions in 2023 were linked to illicit activities. This statistic highlights a significant decline from 2019, when illegal transactions peaked at just 1.29%.
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 the crypto space and insinuated that the primary usage was for illegal purposes, citing drugs and crime.
A recent study by Crypto ISAC reinforced that cash remains the criminal’s tool of choice for illicit activities. While cryptocurrencies are often connected to various high-profile crimes, their actual usage in illegal transactions remains minimal.
While it is challenging to quantify illicit activities in traditional finance, Crypto ISAC estimates that global money laundering activities range from 2% to 5% of the global GDP, equating to approximately $800 billion to $2 trillion annually. Remarkably, cryptocurrency represents only 0.34% of this transaction volume. Additionally, the U.S. Treasury supports these findings, confirming that cash continues to dominate as the preferred method for money laundering due to its anonymity and availability.
Kashkari’s views on cryptocurrency have not wavered in recent years. In February 2024, he labeled Bitcoin as a risky asset lacking practical application in real-world economic contexts and questioned its viability as an inflation hedge.
On October 17, the Minneapolis Fed also published a paper advocating for either a ban on Bitcoin or the implementation of a Bitcoin tax to address persistent fiscal deficits.
