Fed's Kashkari likens stablecoins to casino chips, calls bitcoin 'purely speculative'

By Kim Byeo-ri, The Herald Business

Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, called bitcoin "no more than a speculative asset" and compared stablecoins to casino chips, maintaining a skeptical view of digital assets at a panel discussion during the 2026 BOK International Conference held Tuesday afternoon at the Bank of Korea annex in Seoul.

On bitcoin, Kashkari said the cryptocurrency had failed on every promise made since its debut 17 years ago. "They said it would become a currency and enable efficient transactions — that failed. They said it would hedge inflation, but it surged. And when the Federal Reserve raised interest rates sharply, it collapsed," he said. "Bitcoin is no more than a speculative asset. It has not delivered on any of its other promises."

He was equally critical of stablecoins. "Looking at the current state of stablecoins in the United States, they are primarily facilitating crypto transactions," he said. "It's just like a casino chip. You walk into a casino with cash, and they exchange it one-for-one for chips — a perfect stablecoin." He added that the casino takes the cash and locks it in a vault where it earns no interest and makes no investments. "You gamble, come back, hand in your chips and get your money back. Once you leave the casino, the chips have no utility."

Kashkari said casinos issue chips that cannot be used outside their walls in order to facilitate rapid transactions. "That is the role stablecoins play in crypto trading," he added.

On payments, he said stablecoins face limited demand because the private sector has already developed solutions such as PayPal. He acknowledged, however, that stablecoins could be used to circumvent banking regulation and that cross-border transaction costs could fall as a result.

Kashkari said central banks are paying attention to digital assets partly because of the risk that stablecoins could break the buck — falling below their face value. "In the United States, money market fund values fell and the Treasury had to intervene," he said. "It is not hard to imagine a scenario where central banks would have to backstop stablecoins."

He also warned that as the stablecoin market grows, it could either amplify or undermine the effectiveness of monetary policy. "As money market funds grew in the United States, the Fed had to develop new tools to ensure monetary policy decisions transmitted through the various MMFs — stablecoins will be no different," he said.

Kashkari raised the issue of monetary sovereignty as well. "If stablecoins are used to circumvent banking regulation and evade control over currencies, central banks around the world need to watch this closely," he said. "I will keep an open mind about how this develops, but having watched bitcoin for 17 years, I am skeptical."

He was also dismissive of deposit tokens. "I asked a U.S. banker what new things deposit tokens would enable, and the answer was 'nothing,'" he said. "It seems like a marketing term — similar to ESG, which was once fashionable in the United States."

Meanwhile, Lee Su-hyeong, a member of the Bank of Korea's Monetary Policy Board, said the BOK's central bank digital currency project, known as Project Han River, could reduce payment costs.

The Bank of Korea is currently in the second phase of Project Han River. The initiative uses blockchain technology to issue a wholesale digital currency for institutions; participating financial institutions then issue deposit tokens as a linked payment instrument, and the project tests whether financial consumers can use those tokens in everyday life without problems.

"From the perspective of small business owners in Korea, credit cards charge an average transaction fee of around 3 percent," Lee said. "Other digital payment entrants have come into the market, but transaction fees have not clearly come down — because Korea's economy is small and major providers have not aggressively cut their fees." He said that if the central bank could create incentives to lower fees, it could stimulate competition and drive movement in that direction.

Lee added that the purpose of the CBDC real-transaction pilot test is "to send a message to consumers and retailers that overall transaction costs can be reduced."

"Global remittances 23% stablecoins… BOK's Project Han River a forward-looking innovation case" [Crypto360] At the 2026 BOK International Conference held Tuesday at the Bank of Korea annex conference hall in Jung-gu, Seoul, Robert M. Townsend, a professor at the Massachusetts Institute of Technology, described the Bank of Korea's digital currency experiment as pioneering

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2025-12-06 00:03:08

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“글로벌 송금 23%가 스테이블코인으로…한은 ‘한강 프로젝트’, 전향적 혁신 사례” [크립토360]

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