Neel Kashkari, who took office as president and CEO of the Federal Reserve Bank of Minneapolis on 1 Jan 2016, recently explained why he is not impressed with crypto.
Last Friday (18 November 2022), in the wake of the recent collapse of SBF’s FTX empire, Kashkari shared his latest thoughts on crypto.
Commenting on a Wall Street Journal article (titled “Why the Investing Pros Were Such Suckers for FTX”) published earlier that day, he wrote:
“This is interesting but 2 narrow. This isn’t case of 1 fraudulent company in a serious industry. Entire notion of crypto is nonsense. Not useful 4 payments. No inflation hedge. No scarcity. No taxing authority. Just a tool of speculation & greater fools.“
This is not the first time that Kashkari has come across as a crypto skeptic.
On 17 August 2021, while speaking at the Pacific NorthWest Economic Region (PNWER) annual summit held in Montana he said that he was less optimistic about Bitcoin compared to five or six years ago. Rather than sparking financial innovation, Kashkari said the current landscape of crypto is comprised of “95% fraud, hype, noise and confusion.”
Kashkari argued that Bitcoin would never be able to overtake the U.S. dollar as a form of currency, noting the government’s monopoly on money printing.
As reported by Decrypt, Kashkari said:
“If you go into your basement and you want to produce your own currency, the Secret Service will come knocking on your door. There’s no barrier to you creating your own Bitcoin [and] there are thousands of garbage coins that are being created.“
Kashkari noted that several of the cryptoassets on the market are “complete fraud and Ponzi schemes” and are profiting off the get-rich-quick mindset of the industry.
The Minneapolis Federal Reserve head admitted he had tried to understand the problems that Bitcoin would be able to solve, but ultimately concluded “no one can articulate what the actual problem is.”
He highlighted investor concerns over dollar inflation as a possible avenue for Bitcoin, but countered that BTC has thus far only proved effective at funding illicit activities such as drug dealing and prostitution.
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