Crypto Is ‘95% Fraud, Hype, Noise, and Confusion’, Fed’s Kashkari Says – Barron’s

Neel Kashkari of the Federal Reserve spoke out against crypto at an economic summit this week.

Andrew Harrer/Bloomberg

Bitcoin has no fan in Neel Kashkari.

Pressed on his stance on digital assets at an economic summit Tuesday, the president of the Minneapolis Federal Reserve claimed the crypto space bankrolls illicit activities and is full of scams.

“I was more optimistic about crypto and Bitcoin five or six years ago,” said the central banker, when asked to comment on the growing digital asset space, and initiatives like Miami setting up its own crypto coin. 

“So far what I’ve seen is …95% fraud, hype, noise, and confusion.”

Also read: Why Cryptocurrencies Are a Threat to Central Banks

Kashkari, in Montana for the Pacific Northwest Economic Regional Annual Summit, argued that the dollar remains strong because of restrictions on its creation and use—no one can mint their own U.S. currency, for good reason. 

“There are thousands of these garbage coins that have been created—some of them are complete fraud Ponzi schemes,” the Fed president said.

The central banker also said he has struggled to find people who can articulate how Bitcoin is meant to solve meaningful problems better than existing currencies. “I’ve not seen any use case—other than funding illicit activities like drugs and prostitution—that is legitimate so far that Bitcoin solves,” he said.

Bitcoin has had a wild ride over the last year, with the value of the digital asset soaring from below $12,000 a year ago to peaks above $63,500 in April. It has since given up gains, with the price of Bitcoin down more than 3% in the last 24 hours to around $45,250 Wednesday, according to CoinDesk.

The soaring price of the popular crypto asset, along with peers like Ethereum and Dogecoin, has come in step with increasing popularity among individual investors as well as ownership by corporations and institutions.

Plus: Bitcoin Was Supposed to Be a Way Around Corporate Gatekeepers. Now Big Companies Are Hopping On Board.

The rise of Bitcoin has also sparked interest, and criticism, from central bankers, some of whom are looking to build their own, state-sponsored digital currencies.

Kashkari is the latest central bank voice to join the chorus critical of crypto. The head of the European Central Bank, Christine Lagarde, called for the global regulation of Bitcoin earlier this year, saying that multilateral action was needed to stop “funny business” and money laundering.

Write to Jack Denton at jack.denton@dowjones.com.

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