Fed Voices Clash With Crypto, Markets Stay Guarded

Minneapolis Federal Reserve President Neel Kashkari used a public appearance on Thursday to deliver one of his strongest critiques yet of cryptocurrencies and stablecoins, arguing that advocates fail to provide clear explanations of how the technology solves everyday payment frictions. Kashkari said that when pressed on basic questions about how crypto works for cross-border payments, proponents tend to offer what he called “word-salad nonsense answers” with “nothing there” when examined closely.

He challenged the idea that digital assets significantly reduce costs in real-world scenarios, citing his own attempts to understand how he could cheaply send money to family in the Philippines. Kashkari argued that even if crypto enabled instant transfers, recipients would still need to convert tokens into local currency to buy groceries, a step he said remains expensive and undermines the promised efficiency gains.

According to Kashkari, many crypto advocates implicitly assume a world where everyone adopts a single currency or platform, eliminating conversion frictions. He contended that such a scenario is unrealistic because governments are unlikely to give up control over their own monetary policy. His remarks came as he said the Fed is “pretty close to neutral” and nearing its dual mandate of stable prices and full employment, while emphasizing that policy tightening is not yet fully complete.

While Fed officials debate the merits of digital assets, cryptocurrency markets themselves were subdued. A note from Nexo analyst Iliya Kalchev said Bitcoin hovered near $67,750 and Ethereum traded below $2,000 late in the week, with investors wary ahead of upcoming U.S. Core PCE inflation and GDP releases. The cautious tone followed hawkish signals in the Federal Reserve’s January meeting minutes, which reinforced expectations that rate cuts could be delayed.

Kalchev reported that U.S. Bitcoin exchange-traded funds saw around $165 million in net outflows, while Ethereum funds recorded approximately $130 million in redemptions, pointing to institutional de-risking. At the same time, network indicators such as Bitcoin mining difficulty and hashrate have risen, suggesting underlying protocol activity remains robust even as prices consolidate after an early-February correction.

Broader markets reflected similar caution. Gold traded near record levels and the U.S. dollar was on track for a strong weekly gain, as investors hedged geopolitical risks linked to U.S.–Iran tensions and uncertainty over Fed policy. Nexo’s analysis said near-term crypto price action is likely to remain closely tied to inflation data and rate expectations, with longer-term regulation around stablecoins viewed as a structural, rather than immediate, catalyst.

Separate commentary on Federal Reserve policy pointed to a shift in market expectations for 2026. Futures had long implied only two quarter‑point rate reductions this year, but analysts now see scope for three or more cuts if inflation continues to trend lower. Recent data showed consumer prices rising 2.4% year over year in January, slightly under economists’ 2.5% forecast, while core CPI increased 2.5%, the lowest since April 2021.

Federal Reserve Bank of Chicago President Austan Goolsbee was cited as saying that if the path toward 2% inflation continues, “there’s several more rate cuts that can happen in 2026.” The discussion comes against a backdrop of political pressure from the White House for faster easing, although the Fed left rates unchanged in January. The analysis also noted that Fed Chair Jerome Powell’s term is due to end in mid‑May and that President Donald Trump has nominated Kevin Warsh as his likely successor, with investors expecting Warsh to pursue a more aggressive cutting stance while also shrinking the Fed’s balance sheet.

Options market pricing referenced in the report suggested the implied probability of three or more cuts in 2026 had risen to 43%, up from 25.6% a month earlier. The prospect of additional easing was described as a potential boost for equities by lowering borrowing costs for companies and consumers, although the ultimate impact would depend on how balance‑sheet reduction interacts with lower policy rates.

Outside the U.S., Japanese financial group SBI Holdings announced steps that deepen its integration with the XRP ecosystem. The company launched a 10 billion yen ($64.5 million) blockchain‑based security token bond, branded as SBI START Bonds, that offers investors both a conventional coupon, currently indicated at 1.85% to 2.45% annually, and additional rewards paid in XRP through 2029.

To receive the XRP distributions, retail buyers must open and verify an account with SBI VC Trade, SBI’s crypto brokerage, by May 11, effectively linking a traditional yen‑denominated bond product to onboarding for its digital asset platform. SBI said it views the continued development of Japan’s security token bond market as supportive of capital markets and real‑economy growth.

In a parallel initiative, SBI Ripple Asia signed a memorandum of understanding with the Asia Web3 Alliance Japan to create a venture studio that will provide technical and regulatory support to startups building financial services on the XRP Ledger. The program specifically requires participants to develop natively on XRPL, with the aim of expanding corporate and developer adoption on a network that, according to the articles, has less decentralized finance activity than some rival chains but has recently added features intended to attract institutional users.