The president of the Minneapolis Federal Reserve, Neel Kashkari, condemned the cryptocurrency sector, saying it has become a “farce” as a result of unregulated disorder and increasing crime.
On May 21, Kashkari made this statement at Bay College in Escanaba, Michigan where he voiced out his dissatisfaction at the spread of fraud in the promising crypto space.
“It’s a clever idea that some people came up with, but now it’s being taken to ridiculous extremes,” Kashkari said. “The barrier to entry to creating a new cryptocurrency is zero.”
He added: “If you can dupe enough people to buy it, you can pretend that you’ve launched something. And you can say, ‘Look, I’m a billionaire because I sold you one. And I own the other 999 million of them, so that means I’m a billionaire! So it has become a farce…I’m seeing more noise and more fraud than I’m seeing anything useful.”
Kashkari’s doubt does not imply that he is not confident in the future of bitcoin or other cryptocurrencies, however, he believes that a number of people will lose interest through a usual thinning.
“Does that mean it’s always going to be a farce? No,” Kashkari said. “There will probably be a shakeout, and maybe a handful of these things will end up surviving.”
This is not the first incident for Kashkari to criticize the cryptocurrency market. Back in January, he ruled out bitcoin, stating the dominant cryptocurrency by market cap does not threaten fiat money given its lack of reliability.
“I don’t see bitcoin as a credible competitor to the dollar in the United States of America, and the reason is the barrier of entry to you creating your own coin and me creating my own virtual currency is zero,” he reasoned.
Kashkari is involved in the “blockchain, not bitcoin” movement of crypto cynics who see little worth in cryptocurrencies yet recognize the potentials of the blockchain.
“Blockchain and the underlying technology is probably more interesting and has more potential than maybe bitcoin does by itself,” Kashkari said in May 2017.
Kashkari expressed a similar belief of Joh Williams, the president of the Federal Reserve Bank of New York. Williams believes cryptocurrencies cannot replace fiat money given that they cannot prove what a currency should actually be.
“Cryptocurrency doesn’t pass the basic test of what a currency should be,” Williams said in April 2018. “[Currency is] basically something with a store of value [and bitcoin is not that].”
However, this harsh sentiment of the New York Fed’s John Williams and the Minneapolis Fed’s Neel Kashkari is not shared by their boss, US. Federal Reserve Chairman Jerome Powell, who commended but is not a confirmed crypto cynic.
“[I have] nothing against bitcoin,” Powell said in November 2017. “We generally look at some of the risks of cryptocurrencies associated with money-laundering and those sorts of issues, but we’re not broadly opposed or supportive of alternative currencies.”
Powell who is also of the “blockchain, not bitcoin” movement, is not of the opinion that the crypto market poses any threat to the economy. “They don’t really matter today. They’re just not big enough,” he said.