Nic Carter slams Minneapolis Fed President for saying crypto is 'almost never' used outside of criminal activity

Venture Capitalist Nic Carter criticizes Minneapolis Federal Reserve President Neel Kashkari for his remarks on how crypto is “almost never” used outside of illicit activity, even though the data tells a different story.

In an X post on Oct. 22, Nic Carter wrote “being this wrong should be illegal” in response to Neel Kashkari’s remarks about cryptocurrency being mostly used for illegal activities. He viewed Kashkari’s comments as unfortunate, as he is one of the top ten most important financial regulators on the planet.

Carter followed up his post by linking several data sources that disprove Kashkari’s assumption, including a report from blockchain data firm Chainalysis that found only 0.34% of all crypto transactions in 2023 had connections to illegal activity.

The report revealed that illicit transactions in crypto peaked in 2019 at just 1.29%.

At a Wisconsin Town Hall event hosted by the Chippewa Falls Area Chamber of Commerce on Oct. 21, Minneapolis Fed President, Neel Kashkari, claimed that “very few transactions were actually happening” in crypto.

“They’re not paying for goods and services using crypto. It almost never happens unless people are buying drugs or other illegal activities,” said Kashkari.

A recent study by Crypto ISAC revealed that cash remains the preferred criminal’s financial tool for criminal activities. Although cryptocurrencies have been linked to number of high-profile crimes, including exchange collapses and thefts, the actual portion is still significantly small.

Though it is difficult to track the exact amount of illicit activity in the traditional finance space, Crypto ISAC notes that the estimated amount of money laundered globally in one year is 2% to 5% of global GDP, which ranges between $800 billion to $2 trillion.

Out of that total number, only 0.34% of the transaction volume consists of cryptocurrencies. The U.S. Treasury also echoed these findings, stating that cash continues to be the primary preferred method for money laundering because of its anonymity, stability, and ubiquity.

Kashkari’s stance on cryptocurrency has remained the same in the past few years. In Feb. 2024, Kashkari said that Bitcoin(BTC) is a risky asset with no practical use in real economic scenarios, further questioning the cryptocurrency’s ability to be an effective hedge against inflation.

On Oct. 17, the Minneapolis Fed published a paper urging governments to either ban Bitcoin or enact a Bitcoin tax if they want to maintain their permanent primary deficits.