BTC is a “religious revival” and a toy? Fed president dumps on Bitcoin, BTC-USD and “garbage coins”

The US Federal Reserve’s president of Minneapolis Neel Kashkari had some interesting things to say about Bitcoin last week, equating the cryptocurrency with a “religious revival” and a toy, saying that the BTC price “could go down to zero”.

Kashkari, who has worked on both Wall Street and at the US Treasury in the past, was being hosted for a LinkedIn live interview at the time, by American publication Pensions & Investments on April 4^th.

“Garbage coins”

During the conversation, editor-in-chief Jennifer Ablan asked how the Fed is gearing up to handle more crypto in the economy.

Kashkari’s response came off as both dismissive and derogatory of cryptocurrencies:

Right now, it’s not big enough that I see it as a financial stability risk. It’s so volatile that a lot of people could be put in harm’s way. Of course, there’s thousands of these garbage coins that are introduced… the FCC is now cracking down on some of those schemes. There’s a lot of fraud, there’s a lot of confusion, so I’m worried from a consumer perspective, more than I’m worried from a financial stability perspective.”

Ablan then asked the president when the Fed will adopt Bitcoin, saying that: “I shouldn’t ask this next question, but it came from a reader. ‘When will the Fed put Bitcoin on its balance sheet? You already said on record that you have an unlimited supply of dollars, doesn’t it make sense to trade some of those dollars for a currency with a hard cap?’”

Zero time for Bitcoin

Kashkari’s response spoke volumes:

The hard cap for Bitcoin, I guess, is zero. It could go down to zero. You can just replace the word ‘Bitcoin’ with ‘Beanie Babies’. Should the Fed buy Beanie Babies because Beanie Babies were a fad for a while, [they] had no actual utility in the economy, other than that they were a nice toy that some people enjoyed owning and trading… In the real world, the only use cases I’ve seen is trying to subvert banking regulations, to get around either marijuana banking or illicit activities. I don’t think subverting banking regulations is a legitimate use case. And I know the Bitcoin bros watching this are going to say I’m a Neanderthal…. [but] more than a decade later, there’s still no legitimate use case in a democracy – an advanced democracy. It’s like a religious revival and… unfortunately my skepticism has only grown.”

This was only one of the eyebrow-raising comments by Kashkari during the interview. He also referred to major banks as “too big to fail” and floated the possibility of zero interest rate cuts in 2024.

“Staggering ignorance” from the Fed

The comments have been met by a flood of responses online, particularly on X (formerly Twitter). Among decriers was Alex Gladstein, who called it “staggering ignorance”.

US-based tech CEO Gabor Gurbacs, who is both a crypto investment strategist and the founder of PointsVille, was more comprehensive in his criticism:

The Fed can’t afford to treat Bitcoin with such ignorance and disrespect. Bitcoin market cap is larger than the top 4 global banks combined.”

Crypto stalwart Bitcoin Archive (known as the handle @BTC_Archive) had arguably the most amusing X rejoinder, saying that “the Fed’s Neel Kashkari says Bitcoin has no legitimate use case… $67,000 is the signal, Neel.”

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