REUTERS/Larry DowningCryptocurrencies are “like a giant garbage dumpster” and lack the basic characteristics of any stable currency, Minneapolis Federal Reserve President Neel Kashkari said at an event on Tuesday.
The Fed official praised the Securities and Exchange Commission for “cracking down on” the coin-offering frauds and said “people have been fleeced for tens of billions of dollars.”
Kashkari acknowledged cryptocurrencies could prove useful in the future but quickly added that the sector’s current status “is burning garbage.”
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Minneapolis Federal Reserve President Neel Kashkari didn’t pull punches when giving his opinion on the cryptocurrency sector on Tuesday.
When asked at a Montana event whether he would want his 1-year-old daughter to be gifted a Treasury bond or a bitcoin for her next birthday, the Fed chief picked the former, saying cryptocurrencies are “like a giant garbage dumpster.” Kashkari praised the dollar’s stability compared with the relatively new crypto sector.
“The reason that the dollar has value is because the US government has a legal monopoly on producing the dollar,” he said. “In the virtual-currency and cryptocurrency world, there are thousands of these garbage coins out there. Literally, people have been fleeced for tens of billions of dollars, and finally the SEC is getting involved in cracking down on this.”
Cryptocurrencies are known for their heightened volatility, as their round-the-clock tradability and speculative nature keep prices from remaining stable for even a few minutes. Bitcoin’s price swelled nearly tenfold in the second half of 2017 and just as quickly lost value as investors questioned the coin’s true value.
The Fed official didn’t completely turn his back to the technology, clarifying that cryptocurrencies could prove important in the coming decades but remain a highly volatile asset for the time being.
“Maybe five years from now or 10 years from now or 20 years from now something useful will emerge from this, but so far, all that’s emerging is burning garbage,” Kashkari said.
Tuesday wasn’t the first time the Fed president spoke out against the burgeoning cryptocurrency industry. Kashkari deemed the assets a “farce” while speaking at Bay College in May 2018 and lambasted the lack of regulation around initial coin offerings.
“The barrier to entry to creating a new cryptocurrency is zero,” he said. “I’m seeing more noise and more fraud than I’m seeing anything useful.”
Bitcoin traded at $10,261.54 per coin at 4:30 p.m. ET on Tuesday, up 42% year-to-date.
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