‘Thousands of Garbage Coins,' says Minneapolis Fed President Kashkari

Last year, the Federal Reserve official who famously promised the American people that the central bank could pump limitless money into the economy made some well-worn, oft-debunked critiques of bitcoin and cryptocurrencies in general.

“Five or six years ago, I was more enthusiastic about crypto and bitcoin,” said Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, on Tuesday. “What I've witnessed thus far is 95% deception, hype, noise, and confusion.”

Kashkari compared the open nature of the crypto sector with the US government's monopoly on dollar issuance during his presentation at the Pacific NorthWest Economic Region annual conference in Big Sky, Mont.

“There is no reason why you can't create your own bitcoin, or why I can't create mine... “I'm going to name it Neelcoin,” he said. “And then Larry can develop Larrycoin,” Kashkari continued, pointing to his on-stage interlocutor, Larry Simkins, CEO of conglomerate The Washington Companies.

Other Fed officials have given digital assets a more nuanced and positive evaluation. In June, Vice Chairman Randal Quarles stated that the US should find methods to "say yes" to stablecoins.

While it is true that anybody may create a digital asset, Kashkari overlooked the importance of network effects, which make bitcoin more safe and valuable in the eyes of the market than its numerous rivals.

The central banker went on to say, "There are hundreds of these trash coins that have been produced." “Some of them are outright fraud Ponzi schemes,” says the author. People are duped into investing money, and then the entrepreneurs take advantage of them.”

This is often the case. Kashkari, on the other hand, made a broad generalization.

He stated, "I constantly ask them what issue they're attempting to address, and no one can explain what the real problem is."

Kashkari laughed at the notion that bitcoin might be used as a safe haven against inflation, especially the sort experienced in certain poor nations. He stated, "I don't see any indication that the United States administration or the United States of America is on a road to Venezuela."

Given Kashkari's appearance on television's "60 Minutes" in 2020, early in the pandemic, in which he bragged that "there is no limit to our capacity" at the Fed to pump money into the economy, some bitcoin users may find the statement vexing.

The Venezuela remark also ignored the reality that bitcoin and other cryptocurrencies are a worldwide phenomenon that have been embraced by inhabitants of nations with higher inflation rates than the United States.

While he didn't declare crypto will never be helpful (“it's definitely possible”), Kashkari expressed skepticism about the technology on Tuesday.

“I haven't seen any use case other than financing illegal activities like drugs and prostitution,” he added, oblivious to the fact that bitcoin has been utilized by politically disfavored publications and dissident voices in countries like Russia to avoid official blacklisting.