Kashkari's Crypto Criticism Reveals Deep Fed Division Over Digital Assets

Why it matters: Minneapolis Fed President Kashkari, who holds FOMC voting rights in 2026, declared cryptocurrency "utterly useless" and dismissed stablecoins as "buzzword salad." However, within the same FRB, Governor Waller welcomed "a new era for crypto assets," and the Trump administration has already institutionalized the $310 billion stablecoin market with the GENIUS Act. This statement is not merely a personal opinion but an manifestation of a power struggle over central bank monetary sovereignty, a moment when the "enemy within the system" for crypto assets became visible.

📝 Summary: Minneapolis Fed President Kashkari, who holds FOMC voting rights in 2026, declared cryptocurrency "utterly useless" and dismissed stablecoins as "buzzword salad."

What Happened

• Kashkari's Remarks — On February 19, 2026, Minneapolis Fed President Neel Kashkari asserted at the Midwest Economic Outlook Summit in Fargo, North Dakota, that crypto assets are "utterly useless" despite being around for over a decade. He also dismissed stablecoins as "buzzword salad," claiming they offer no advantage over existing payment services like Venmo. He asked attendees to raise their hands if they had used ChatGPT and then if they had bought or sold anything with Bitcoin, contrasting the utility of AI with the perceived uselessness of crypto assets.
• FRB Internal Division — In contrast to Kashkari's remarks, FRB Governor Christopher Waller stated that "distributed ledgers and crypto assets are no longer on the periphery; they are woven into the payment and financial system," declaring that the FRB will play an "active role" in the crypto asset revolution. This is an unusual situation where diametrically opposed views on crypto assets are openly expressed within the same central bank.
• Reality of the Stablecoin Market — The stablecoin market, which Kashkari deemed "useless," has reached a market capitalization of $310 billion. In 2024, stablecoin transfer volume surpassed the combined total of Visa and Mastercard by 7.7%, reaching $27.6 trillion. The GENIUS Act (effective July 2025) has already established a federal regulatory framework. Zelle has begun introducing stablecoins for international remittances, and five crypto-native companies have obtained national trust bank charters.

Overall Picture

Historical Context

The conflict between central banks and emerging currency technologies is a historically recurring pattern. To understand its structure, we need to look at three precedents.

In the late 1990s, during the dawn of internet payments, the FRB expressed concerns that "electronic money would make it difficult to control the money supply." PayPal founder Peter Thiel declared, "We are going to end the government's monopoly on currency," but ultimately PayPal was integrated into the existing financial regulatory framework, and the "power within the system" of regulators prevailed.

In 2019, when Facebook announced "Libra" (later Diem), central banks, including the FRB, immediately opposed it. Chairman Powell himself expressed "serious concerns" about Libra, and a series of congressional hearings were held. Ultimately, Diem was forced to sell its assets in 2022. This is the most direct example of central banks crushing emerging currency technology through political pressure.

However, the structure fundamentally changed in 2024-2025. With the approval of spot BTC ETFs (January 2024), the enactment of the GENIUS Act (July 2025), and the Presidential Executive Order on Strategic Bitcoin Reserves (March 2025), crypto assets transitioned from "unregulated challengers" to "a legally recognized part of the financial system." While Kashkari's remarks would have been mainstream common sense a decade ago, by February 2026, they are positioned closer to "a personal objection to a market that has completed institutionalization."

Furthermore, it is noteworthy that Kashkari is an FOMC voting member in 2026. He was reappointed in December 2025 despite pressure from the Trump administration. He also symbolizes the independence of the FRB. His criticism of crypto assets must be read in the context of his views on monetary policy and the defense of central bank authority.

Stakeholder Map

Structure Seen in Data

• $310 billion — Total stablecoin market capitalization at the beginning of 2026. A 49% growth from $205 billion at the beginning of 2025. The actual size of the market Kashkari deems "useless."
• $27.6 trillion — Total stablecoin transfer volume in 2024. Exceeded the combined total of Visa and Mastercard by 7.7%, contradicting Kashkari's "no advantage" argument when comparing the scale with existing payment infrastructure.
• 2.5%→5% — Stablecoin transfer fees (2.5%) vs. traditional bank transfer fees (5%). Recipients achieve an average of 40% cost savings, proving practical utility, especially in emerging economies.
• 56% — Percentage of current stablecoin holders who intend to increase their holdings in the next 12 months. In Africa, 79% reported current or recent stablecoin ownership.
• 500 million — Global stablecoin wallet addresses. Over 25,000 merchants accept them for online payments.
• 2026 FOMC Voting Rights — Kashkari is an FOMC voting member in 2026. It is a year when three "hawks" — Logan of Dallas, Hammack of Cleveland, and Kashkari — will have voting rights.
• $133.4 billion — As of February 18, $133 million in daily outflows from BTC spot ETFs. BTC price has fallen approximately 50% from its October high to around $67,000.

Reading Between the Lines — What the News Isn't Saying

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Narrative War × Institutional Decay

Kashkari's criticism of crypto assets is the central bank's last line of defense for monetary sovereignty, and at the same time, it visualizes "Institutional Decay" where the central bank's internal opinions become divided as crypto assets become institutionalized.

Narrative War: Why Must Central Bankers Call Crypto Assets "Useless"?

Kashkari's remarks are not a matter of personal preference. They are an institutional defensive reaction to a threat against the very raison d'être of central banks, which manage the money supply and control the transmission channels of monetary policy.

To understand the structural reasons why Kashkari declares crypto assets "utterly useless," one must adopt the "worldview" of a central banker.

The FRB's monetary policy permeates the economy through "bank channels." When the FRB changes the FF interest rate, bank lending rates change, affecting corporate investment and consumer spending. The premise of this mechanism is that almost all economic activity passes through the banking system. While the stablecoin market capitalization of $310 billion is only about 1.5% of the U.S. M2 money supply (approximately $21 trillion), the total transfer volume of $27.6 trillion exceeds that of Visa and Mastercard. This means that in the realm of "flow," rather than "balance," stablecoins have already reached a scale equivalent to or greater than existing financial infrastructure.

This "erosion of flow" is the central banker's fundamental concern. If a significant portion of economic transactions were to occur outside the banking system via stablecoins, the FRB's monetary policy transmission mechanism would weaken. Kashkari's remark that "the main use is to evade KYC and AML regulations" refers to the risk of crypto assets diverting financial flows outside the regulatory framework.

However, this argument has a time lag. The GENIUS Act (effective July 2025) mandated KYC, AML, and real-time transaction monitoring for stablecoin issuers. Tether introduced "USA₮," issued from a U.S. chartered bank, in January 2026 to comply with the GENIUS Act. Kashkari's criticism of "regulatory evasion" applied to stablecoins before the GENIUS Act, but it has weak grounds in the post-GENIUS Act regulatory environment.

Kashkari's comparison with AI is also telling. He stated that "AI can contribute trillions of dollars to GDP." McKinsey estimates that generative AI could create $2.6-4.4 trillion in economic value annually. In contrast, the direct GDP contribution of crypto assets is difficult to measure. This framing shifts the discussion from stablecoins' "efficiency as payment infrastructure" by using "contribution to the real economy" as the criterion. To say stablecoins are "meaningless" compared to Venmo is an argument that isolates only domestic personal remittances, ignoring the reality of 40% cost savings in international remittances and 500 million global wallet addresses.

Institutional Decay: The More Crypto Assets Are Institutionalized, the More Central Banks Divide Internally

Within the same institution where Governor Waller welcomes "a new era for crypto assets," Kashkari declares them "utterly useless." This division is a direct manifestation of the paradox created by the institutionalization of crypto assets.

Before 2024, the FRB's stance on crypto assets was relatively unified—"observe cautiously but do not actively engage." However, as crypto assets became institutionalized, a clear division emerged within the FRB between "acceptance proponents" and "resistance proponents."

Governor Waller, a leading proponent of acceptance, acknowledged that "distributed ledgers and crypto assets are no longer on the periphery" and indicated an intention to open the FRB's payment system to DeFi companies. The policy to provide FRB master accounts to crypto asset-related companies by Q4 2026 effectively means integrating crypto asset companies into the FRB's payment infrastructure. With Circle, Paxos, Ripple, BitGo, and Fidelity Digital Assets having obtained national trust bank charters, this integration is already underway.

On the other hand, the logic of the resistance faction, represented by Kashkari, is rooted in "defending the central bank's raison d'être." He likened crypto assets to "Beanie Babies" in a CNN interview in November 2025, but his "utterly useless" remark in February 2026 further escalates this rhetoric. This rhetorical intensification is a reflection of the sense of crisis regarding the progress of institutionalization.

This paradox is most sharply manifested in the realm of stablecoins. In the era when stablecoins were "unregulated rebels," the FRB could oppose them as a united front. However, with the GENIUS Act bringing stablecoins under federal regulation, mandating KYC/AML, and legalizing 1:1 reserve backing, stablecoins have become "regulated financial products." Zelle's adoption of stablecoins for international remittances is evidence that the traditional banking system itself has recognized stablecoins as "useful."

Kashkari's continued assertion that stablecoins are "useless" in this situation has two interpretations. First, his function as an "institutional canary" embodying the FRB's independence. He is demonstrating the FRB's political independence by asserting the central bank's unique perspective against the Trump administration's promotion of crypto assets. Indeed, he was reappointed in December 2025 despite pressure from the Trump administration. Second, a "preemptive strike" to protect the effectiveness of monetary policy. By attacking the legitimacy of stablecoins before they weaken the monetary policy transmission channels, he is attempting to put the brakes on Congress and public opinion.

Senator Elizabeth Warren's request on February 18, 2026, to FRB Chairman Powell and Treasury Secretary Bessent for a commitment not to use taxpayer funds for crypto asset bailouts indicates that Kashkari's "useless" argument resonates not only within the FRB but also in Congress. With BTC prices down 50% from their October high to around $67,000, and President Trump and his family's crypto asset company, World Liberty Financial, facing allegations of conflicts of interest, Kashkari's criticism is resonating and amplified within this political context.

Intersection of Dynamics

"Narrative War" and "Institutional Decay" see their dynamics change according to the maturity of crypto assets. In the era when crypto assets were unregulated, central bank criticism was a weapon for "exclusion." However, now that crypto assets have been institutionalized through the GENIUS Act, ETFs, and national bank charters, the same criticism has transformed from a tool for "exclusion" into one for "power struggle within the system." While Kashkari's remarks have limited direct impact on the market (BTC +0.59%), their political significance is substantial. He is a hawk with FOMC voting rights in 2026, standing at the intersection of monetary policy and crypto asset policy. Waller says, "The FRB will open its payment infrastructure to crypto assets," while Kashkari says, "They are utterly useless"—this division indicates that the FRB is at a critical juncture, deciding whether to embrace stablecoins as an "ally" or exclude them as an "enemy." With Chairman Powell's term ending in May 2026 and Trump's nominee Kevin Warsh emerging as a potential successor, the outcome of this power struggle will determine the very monetary order of the United States.

Pattern History

2019: The Demise of Libra (Diem) — Exclusion of Emerging Currencies by a Central Bank Coalition

In June 2019, Facebook announced its vision for the Libra stablecoin. The plan for a platform with a 2.7 billion user base to issue its own currency sent shockwaves through central banks worldwide. FRB Chairman Powell expressed "serious concerns," and French Finance Minister Le Maire declared that it "cannot be allowed to become a sovereign currency." Zuckerberg faced intense scrutiny in congressional hearings. Initial members like Visa, Mastercard, and PayPal withdrew, and although Libra was renamed "Diem," it was forced to sell its assets in 2022. This is the most direct precedent of central banks and regulators collaborating to crush emerging currency technology. Ironically, Libra's failure motivated central banks to accelerate CBDC (Central Bank Digital Currency) research, becoming a catalyst for 134 countries to advance CBDC research, trials, and implementation.

Structural similarities with the present: The 2019 Libra criticism and Kashkari's 2026 remarks are similar in that they represent "central bankers' rejection of emerging currencies," but there is a crucial difference. Libra was an "extra-systemic" threat, allowing for direct exclusion through regulatory power. However, stablecoins in 2026 are "institutionalized by the GENIUS Act," and Kashkari's criticism lacks the power to exclude. This indicates a structural change where the effectiveness of central bank "rejection" diminishes as institutionalization progresses.

2013: Bernanke's Bitcoin "Acceptance" Letter — The Origin of the FRB's Stance on Crypto Assets

In November 2013, FRB Chairman Ben Bernanke sent a letter to a Senate hearing on crypto assets, stating that Bitcoin "may hold long-term promise." While acknowledging that the FRB did not have direct regulatory authority, he expressed cautious optimism. This letter fueled a surge in BTC prices, pushing them past $1,000. Bernanke's stance demonstrated the principle that "central banks should not reject emerging technologies," but it also revealed that the FRB lacked a clear policy framework for crypto assets. For over a decade thereafter, the FRB's crypto asset policy fluctuated between "ambiguous acceptance" and "fragmented criticism," with the division between Kashkari and Waller being its culmination.

Structural similarities with the present: Bernanke's cautious acceptance in 2013 and the FRB's internal division in 2026 show how the central bank's stance on crypto assets has shifted over 13 years from "ambiguous observation" to "intense internal conflict." While Bernanke expressed acceptance as a "personal opinion," in 2026, it has been elevated to a "policy-level division" where Waller institutionally promotes and Kashkari institutionally resists. The market size and institutionalization of crypto assets no longer allow for ambiguity within the FRB.

Patterns Revealed by History

The relationship between central banks and crypto assets has followed a pattern of "ignorance → rejection → division." In 2013, Bernanke ambiguously accepted them, and in 2019, Libra was rejected and successfully excluded. However, with institutionalization in 2024-2025 (ETF approval, GENIUS Act, strategic BTC reserves), the FRB in 2026 can no longer respond with mere rejection. The conflict between Kashkari and Waller is evidence that the institutionalization of crypto assets is reorganizing the internal power structure of central banks.

Future Scenarios

Optimistic Scenario (Probability: 25%)

The FRB opens master accounts to crypto asset companies by Q4 2026, and Waller's approach becomes mainstream. Powell's successor, Warsh, adopts a neutral to friendly stance on crypto assets, establishing a coexistence model between the FRB and stablecoins. The stablecoin market expands to $500 billion, and platform assets like ETH and SOL also benefit.

Investment/Action Implications: Focus on stablecoin-related assets (Circle IPO stock, SOL, ETH). Gradually build positions once the FRB's policy shift is confirmed.

Base Scenario (Probability: 50%)

Kashkari's criticism remains a minority view within the FRB, but the trend of institutionalization continues. The GENIUS Act's implementation stabilizes, and the stablecoin market grows moderately. However, the opening of FRB master accounts is postponed until after Warsh's inauguration. The overall crypto asset market trades in the BTC $60,000-$90,000 range, and stablecoins are steadily integrated into existing financial infrastructure.

Investment/Action Implications: The structural growth of the stablecoin market remains a valid long-term theme. In the short term, assuming directionless BTC price movements, dollar-cost averaging and diversified investment are rational. Monitor the stablecoin integration trends of traditional banks like Zelle.

Pessimistic Scenario (Probability: 25%)

A further decline in BTC price (below $50,000) politically strengthens Senator Warren's criticism of crypto asset bailouts, leading to additional stablecoin regulatory enhancement bills in Congress. Kashkari's criticism gains support within the FRB, and the opening of master accounts is indefinitely postponed. Competitive conditions between crypto asset companies and traditional banks shift in favor of banks, and stablecoin market growth slows.

Investment/Action Implications: Consider reducing crypto asset positions. Shift to traditional financial assets if regulatory tightening risks materialize. However, a complete rejection of the $310 billion stablecoin market is difficult, so select compliant companies (e.g., Circle's USDC) that survive regulatory tightening.

Key Triggers to Watch

• FRB Chairman Powell's retirement and Warsh's inauguration as Chairman: May 2026
• FRB decision on opening master accounts to crypto asset companies: Q4 2026
• Deadline for response to Senator Warren's demand for a crypto asset bailout ban: February 27, 2026
• BTC price falling below $60,000 or recovering to $80,000: Q1-Q2 2026
• Circle (USDC issuer) IPO developments: H1 2026

Tracking Points

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Sources:

• Cointelegraph Japan (Original Tweet)
• CoinDesk - Kashkari calls crypto utterly useless
• Bitcoin Magazine - Federal Reserve enters a new crypto era
• CNBC - Warren Fed Treasury crypto bailout