Neel Kashkari Warns of BTC’s Risks, Utility Comparisons

Despite dissenting views, Neel Kashkari’s skepticism has grown due to fraud and confusion in the crypto industry.

On Thursday, at a LinkedIn Live event, Neel Kashkari, President and CEO of the Federal Reserve Bank of Minneapolis, discussed Bitcoin with Jennifer Ablan, Editor-in-Chief of Pensions & Investments.

The chairman of the Federal Reserve Bank of Minneapolis described bitcoin as a “consumer protection issue” because some investors do not comprehend their crypto investments in their entirety. Furthermore, he issued a warning that cryptocurrencies are “so volatile that certain individuals could be severely harmed.” 

Comparing bitcoin to Beanie Babies, the president of the Federal Reserve stated that they “have no practical utility in the economy beyond being a nice toy that some individuals enjoy trading and possessing.”

Furthermore, he stated that the sole instances in which he has observed Bitcoin being utilized are by merchants “attempting to circumvent marijuana banking regulations, subvert banking regulations, or engage in illegal activities.”

Neel Kashkari drew a comparison to Amazon. “According to the ‘Bitcoin guys,’ no one purchased a book online in 1994; therefore, Amazon has no future. 1994 was not the year for Amazon. This is Amazon in 2004.” He emphasized:

“Bitcoin has been around for more than a decade, and more than a decade later, there’s still no legitimate use case in an advanced democracy.”

Numerous individuals held divergent views with Neel Kashkari regarding the applications of Bitcoin.

For instance, Human Rights Foundation Chief Strategy Officer Alex Gladstein penned on X: “In an advanced democracy, Bitcoin has dozens of legitimate use cases, including power grid management, international money transfers, family savings, micropayments, multisig treasury management, waste energy to profit conversion, methane emission reduction, and the construction of a digital commerce system resistant to surveillance.”

Noting that the “last two sentences” of the Fed official are “interesting.”

Neel Kashkari’s Evolving Views on Cryptocurrencies

Before five or six years ago, Neel Kashkari, a longtime Bitcoin skeptic, was more optimistic about cryptocurrencies.

Despite this, his evaluation of the asset class has intensified as a result of the industry’s pervasive fraud, hype, clamor, and confusion.

Concerning the proliferation of “garbage coins,” he has issued a warning, characterizing certain examples as utter frauds and Ponzi schemes that aim to deceive investors.