Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, hammered crypto again, claiming that legitimate transactions are rare.
According to him, the only reason most people touch crypto is for illegal purposes like drugs. “People are buying and selling crypto,” he said, but they aren’t using it to pay for things legally.
Unless it’s drugs or illegal stuff, he claimed, crypto barely sees any action. Kashkari has been a long-time critic of crypto.
He’s been loud about his belief that the entire industry is full of hype, scams, and fraud. His comments date back to at least 2022 when he compared Bitcoin to nothing more than a speculative fad, likening it to Beanie Babies. Back then, he slammed Bitcoin for having no real value, pointing out that it’s mostly used for speculation.
A decline in crypto crimes
Meanwhile, data shows that the value of crypto sent to illegal addresses fell to $24.2 billion in 2023, down from $39.6 billion in 2022.
But even with that drop, the illegal portion of the market still made up 0.34% of total transactions in 2023, compared to 0.42% the year before.
Stablecoins, particularly Tether (USDT), have become the tool of choice for criminals. Bitcoin, the original star of crypto, is taking a backseat to these stablecoins due to their stability.
Criminals prefer something that doesn’t swing wildly in price while they move money around. In 2023, stablecoins were at the center of illegal activities in the crypto space, taking the crown from Bitcoin.
Ransomware and darknet markets continue thriving though. In 2023, ransomware attacks pulled in about $1.1 billion in crypto payments.
Meanwhile, darknet markets, where people buy drugs and other illegal things, racked up sales of around $1.6 billion.
Kashkari on Fed’s rate cuts
While Kashkari’s harsh view on crypto remains unchanged, he also touched on other issues during his speech in Wisconsin.
He talked about the Fed’s rate cuts, saying he supports the bigger-than-usual cut they made last month but expects smaller cuts moving forward.
“Right now I am forecasting some more modest cuts over the next several quarters,” Kashkari said. Last month, the Fed slashed rates by half a point for the first time since the pandemic hit.
Kashkari believes future cuts will be more modest unless there’s clear evidence that the labor market is falling apart.
So far, data shows hiring was stronger than expected, and inflation hit harder than predicted in September. As a result, markets are expecting the Fed to cut rates by another quarter point at their next meeting in November.
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