2020 is turning out to be a great year for crypto. Most of the top cryptocurrencies have seen a significant increase in their prices. Bitcoin price for example has jumped +40% + year to date. However, many central bank officials still have a lot of mistrust and disdain for the crypto industry.
Neel Kashkari Speaks
The disdain for crypto was demonstrated recently at a recent event attended by Neel Kashkari, the president of the Minneapolis Federal Reserve. During the event that was posted on YouTube, Kashkari described crypto as a “giant garbage dumpster.” He said that crypto doesn’t have any characteristics of a stable currency.
According to him, the reason the USD has value is due to the legal monopoly that the government has to print the dollar. He said that this was not the case for crypto. Kashkari noted that there were thousands of garbage coins in the crypto sector. He noted that if you went into your basement and began photocopying dollars, the authorities would come and arrest you. He noted that thousands of these garbage coins had been created and fleeced people billions of dollars. Kashkari noted that due to this fraudulent activity, the SEC had gotten involved and it was now cracking down on the sector.
Long Term Cryptocurrency Use Cases
Kashkari did concede that in the future, something useful could emerge from the sector in the next five to twenty years. However, he said that in its current form, it was burning garbage. He also said that crypto was mostly fraud and noise. Thus, he would not want anyone to give his child Bitcoin.
Jerome Powell Federal Reserve
Kashkari is not the only office in the US central bank that has expressed a negative opinion on crypto. The Chair of the Board of Governors, Jerome Powell, has also expressed negative sentiments about crypto. He has said that unlike China, a public ledger for a digital currency would not be feasible. He also admitted that the launch of Facebook Libra had been a jolt to the system for the Federal Reserve.
President Trump has also expressed negative sentiments regarding crypto. In his fiscal year 2021 budget, Trump called for crypto to be more tightly regulated. To achieve this, the Treasury Secretary has proposed that the Secret Service be moved back to the Treasury Department to assist in better of illegal activity around crypto.
However, not everyone at the Federal Reserve is opposed to crypto. Lael Brainard, a member of the US Federal Reserve Board of Governors, recently said that Facebook Libra had caused central banks around the world to consider issuing their own digital currencies. In a recent report, the Fed was investing in the distributed ledger and possibility of issuing a Fedcoin.
Several countries are looking into the possibility of issuing a digital currency. Most of these efforts appear to have been ignited by the Facebook Libra project. Thus far, China is emerging as a clear winner in the race to launch a digital currency, which could happen sometime this year.
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