By George Ward
Neel Kashkari, currently the Minneapolis Federal Reserve Bank president, has made some negative comments about the crypto industry following the sudden collapse of the FTX.
He further said FTX is not the only fraudulent company operating in a serious industry. But, he added that the entire concept of cryptocurrency is nonsense.
According to Kashkari, a crypto is a mere tool for greater fools and more speculation. He also mentioned that crypto isn’t helpful for payment and has no inflation hedge, scarcity, or taxing authority.
The Minneapolis Federal Reserve Bank president has shown no interest in bitcoin or the crypto industry. However, he became famous for calling the sector a giant garbage dumpster.
In an interview last year, he stated that 95 percent of crypto and bitcoin are frauds. He added that the industry is all hype, noise, and confusion.
Kashkari also stated that he has never witnessed any other use of the industry other than funding illegal activities like drug trafficking and prostitution. Following the fall of the crypto exchange FTX, many federal officials call for stricter regulations guiding the crypto industry.
Financial Regulators Want Tight Crypto Regulations
The vice chairman of the Federal Reserve, Lael Brainard, has heavily emphasized the need to implement rigid cryptocurrency regulations. In a statement, she showed how disturbing it is to see retail investors being harmed by these losses.
In response to a question from the Senate Banking Committee this week, Michael Barr, the Federal Reserve’s vice chair for supervision, stated that the Fed is very concerned. Their concern is about the risk involved in a non-banking sector, of which they have almost zero knowledge.
This certainly includes crypto activities that have the potential to introduce risk into the Fed-regulated financial system.
Kashkari believes that the failure of FTX is not the result of a single dishonest company in the crypto marketplace. Meanwhile, some have pointed out that the FTX collapse is not solely about cryptocurrency.
Meanwhile, the owner of the NBA Dallas Mavericks team, Mark Cuban, explained the recent blowups of companies in the cryptocurrency space. He claimed that these blowups had been a result of banking failure.
According to him, such failures include collateral misvaluations, lending to the incorrect entity, arrogant arbitrages, and depositor runs.