Nic Carter Rebukes Fed President’s Crypto Crime Claims

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Nic Carter Rebukes Fed President's Crypto Crime Claims

Venture capitalist Nic Carter has publicly criticized Minneapolis Federal Reserve President Neel Kashkari for his recent comments regarding cryptocurrency usage. 

In a post on social media platform X (formerly Twitter) on October 22, Carter rebuked Kashkari’s claim that crypto is “almost never” used outside of illegal activities, calling the statement “unfortunate” given Kashkari’s role as a critical financial regulator.

“Being this wrong should be illegal,” Carter wrote in response to Kashkari’s remarks, which were made during a town hall event hosted by the Chippewa Falls Area Chamber of Commerce on October 21. Kashkari asserted that few cryptocurrency transactions occur for legitimate purposes and suggested that crypto is primarily used to purchase illegal goods or drugs.

Nic Carter Challenges Misconceptions with Data-Backed Evidence

These claims were swiftly countered by Carter, a well-known voice in the blockchain space, who presented data from a number of sources to disprove Kashkari’s claims. Carter cited among that evidence a 2023 report from blockchain analytics firm Chainalysis that said only 0.34% of cryptocurrency transactions are connected to illicit activities. The paradox reported is also that those peaks of criminal crypto transactions happened in 2019 and 2020 and constituted 1.29 percent of all transactions in the year.

And the statistics are in stark contrast to Kashkari’s presentation of cryptocurrency as a bandwagon mostly filled with criminals. Someone in Kashkari’s influential role making such comments could lead to misinforming the public of what digital assets are about, Carter said.

The Crypto ISAC study builds on Carter’s stance. The report found that although cryptocurrencies have been associated with high-profile crime stories – including exchange hacks and thefts – the share of using cryptocurrencies for illegal purposes is minuscule. 

On the other hand, criminals, unlike traditional financial instruments like cash, continue to prefer other financial instruments. From cash, the preferred method of laundering because anonymity and ubiquity remain easier for the networks than direct banking connections, the study estimates that up to 5 percent, or as little as 2 percent, of global GDP, between $800 billion and $2 trillion each year, is laundered through traditional financial systems.

These findings are backed up by the U.S. Treasury, which has stated that while digital currency is getting attention as a potential vehicle for money laundering, the use of cash remains a top money laundering activity.

Kashkari’s Continued Skepticism Fuels Ongoing Crypto Debate

Though evidence of most crypto transactions being legitimate is only growing, Kashkari persists in a consistently negative view of cryptocurrencies. Earlier this year, Bitcoin was dismissed by him as a risky asset with no practical use in real world economic scenarios. On October 17, the Minneapolis Fed published a paper in which it proposed that governments might either prohibit Bitcoin or impose a crypto tax to help manage fiscal deficits.

Many in the crypto community echo these criticisms, believing that policymakers ought to make their decisions based on real data, not outdated perceptions. With crypto adoption accelerating across the globe, discussions around financial regulation revolve around its risks and benefits.

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