Federal Reserve Bank of Minneapolis President Neel Kashkari said Friday that the whole idea of cryptocurrency is “nonsense” after the implosion of FTX revealed the industry’s shortcomings.
“This isn’t case of 1 fraudulent company in a serious industry,” Kashkari said on Twitter, commenting on an article about how investors fell for FTX. “Entire notion of crypto is nonsense. Not useful 4 payments. No inflation hedge. No scarcity. No taxing authority. Just a tool of speculation & greater fools.”
While many officials have warned about crypto risks and the need for regulation, Kashkari’s comment represents one of the most forceful denunciations by a Fed policymaker.
Earlier this week, Fed Vice Chair Lael Brainard said she’s concerned that retail investors were taking losses and bemoaned a “domino effect” of one platform or firm’s failures spilling over elsewhere.
Also, Michael Barr, the Fed’s vice chair for supervision, warned Congress that it needed to pass legislation with strong crypto guardrails to prevent future financial-stability risks.
Meanwhile, the New York Fed is partnering with almost a dozen banks and other financial institutions to test out digital dollars, a sign that Wall Street intends to push ahead with its cryptocurrency agenda despite recent upheaval in the market.