Politicians and other spokespeople regularly criticise cryptocurrencies. They claim that digital assets are allegedly only needed for illegal activities like purchasing illegal substances or financing terrorism.

However, the critics somehow fail to mention that cryptocurrencies operate on the basis of transparent blockchains, which make it possible to track the movement of any amount of money. In addition, cash is much more actively used for such transactions, as it leaves no real trace.

The struggle of Bitcoin and the dollar

As noted the day before the representative of the crypto exchange Coinbase Philip Martin, to explain such a trend is quite simple. All the same, the authors of such statements banally do not understand the principles of blockchain and decentralised assets, which is really similar to the truth.

How are cryptocurrencies used?

Kashkari’s level of knowledge about cryptocurrencies can be easily assessed by his quote published by Cointelegraph journalists. Here is a rejoinder on the subject.

Goods and services are not paid for using cryptocurrencies. It almost never happens, unless people are buying drugs or engaging in other illegal activities.


Of course, this is false, because digital assets are used on a large scale by people to transfer value. Particularly popular in this context are stablecoins, which are tokens with a peg to the value of dollars or other fiat currencies. For example, as IntoTheBlock representatives noted, last week transactions with USDT and USDC accounted for almost 50 per cent of all transactions by the largest cryptoassets.

For example, we used USDC stablcoin on the Solana network earlier this year to pre-order a second-generation cryptocurrency smartphone from the Solana Mobile division. As revealed in late September, the device will be called Seeker and will get features for cryptocurrency transactions. Key among them is the Seed Vault, which allows for secure coin transactions.


Solana Seeker cryptocurrency smartphone

The comment legitimately generated a lot of heath among investors on Twitter. Here, for example, is a brief response from Castle Island Ventures partner Nick Carter.

I think it’s simply illegal to be so wrong in your reasoning.

Federal Reserve Bank of Minneapolis President Neel Kashkari

Carter added that misinformation from a politician is even more troubling because he is one of the “top 10 most important financial regulators on the planet.”

Brown Rudnick partner Hayley Lennon also criticised Kashkari’s inappropriate comments in one of her recent tweets. Here’s the comment.

Legal crypto projects have state-of-the-art anti-money laundering policies. Physical cash is the preferred way to fund drug trafficking and illegal activities. We’ve been fighting this false narrative for a decade.

Neel Kashkari is a long-time sceptic of the crypto market. His statement is similar to that of coin haters along the lines of Senator Elizabeth Warren and Congressman Brad Sherman.

However, the statistics are not on the side of the politicians. In a report by Chainalysis, a major analytics company, dated 18 January 2024, it was noted that only 0.34 percent of all crypto transactions last year could be linked to any illegal activity.

This data can be trusted, as the giant is a leader in tracking coins that were involved in illegal transactions. On top of that, the company cooperates with key law enforcement agencies in different countries.

Share of illegal transactions in crypto by year

Notably, the peak of illegal transactions over the past six years came in 2019 at just 1.29 per cent. Accordingly, the industry of digital assets attracts not only criminals, besides, in many countries coins are easily obtained for everyday purchases. More often than not, they are immediately converted into fiat by the seller, but the possibility is still there.

Just a day before Kashkari’s speech, the Federal Reserve Bank of Minneapolis proposed taxing or banning such assets, similar to Bitcoin, to help governments maintain their budget deficits.

In addition, the politician said in May that cryptoassets and central bank digital currencies (CBDCs) are not a prominent part of the financial system and are seriously inferior to traditional payment platforms.


Neel Kashkari is yet another reminder that new technologies are often viewed with wariness and criticism. In this case, though, cryptocurrency is threatening the Fed in one way or another, as coins are increasingly being used to transfer value bypassing centralised platforms. This means that Kashkari's statements, among other things, could have been made on purpose to scare away people from crypto who have not yet had time to deal with the topic.