Minneapolis Federal Reserve President Neel Kashkari has found himself on the wrong end of a backlash after stating that most cryptocurrency transactions involve drugs or illegal activities.

The comment from the official, a known crypto skeptic, did not go unchallenged, with several members of the community calling him out for it.

Fed Official Says Crypto Mostly Used for Illegal Activity

Kashkari was at a town hall meeting in Chippewa Falls, Wisconsin, when a member of the audience asked whether the Fed had the capacity to collect data on crypto transactions since most of them happened “outside of the formal channels.”

While acknowledging that the agency was pioneering new data sources to keep abreast of the happenings in the sector, Kashkari said that despite crypto’s recent growth, legitimate transactions for goods and services using such assets remain rare.

“They’re not paying for goods and services using crypto. It almost never happens, unless people are buying drugs or other illegal activities,” Kashkari said.

Interestingly, his comments come only days after the Minneapolis Federal Reserve Bank controversially suggested the government should tax or ban crypto assets, including Bitcoin (BTC), to help maintain a deficit on its budget.

Experts Refute Claims

After a crypto news account on X reported the remarks, it set off a frenzy of condemnations. Hailey Lennon, a crypto law analyst and former regulatory counsel for Coinbase, challenged the Fed’s comments, highlighting that legitimate crypto projects have state-of-the-art anti-money laundering measures.

She also noted that cash, not cryptocurrency, remains the preferred meth