The US Office of Government Ethics (OGE) has enacted a strict government crypto ethics policy for all government employees. Effective immediately, employees of federal agencies may not own crypto nor stablecoins while working on matters that could affect the price of their assets.
Moreover, the legal advisory from the OGE removes de minimis exemptions. In other words, even a few dollars worth of the asset precludes the owner from working on any matter that could affect its price.
There might be an exception from this rule for members of Congress. Senators and Representatives enjoy various legal benefits such as exemption from insider trading rules.
As of 2020, there are over 2.8 million federal employees, yet it remains unclear how many would need to shed their bags based on the OGE’s new rules.
Preventing US government crypto ethics violations
The OGE’s legal opinion letter addresses obvious yet unaddressed misbehavior by federal employees. For example, now-former director at the SEC William Hinman allegedly earned millions from a pro-Ethereum law firm during his tenure. That same director orated a famous speech that said then-current offers and sales of Ethereum were not securities.
Ethereum immediately rallied on the news. It’s enjoyed a tailwind from this regulatory blessing for years.
At the time of Hinman’s speech, no OGE rule prevented him from receiving pro-Ethereum compensation while working on crypto matters — yet before making the infamous statement, the SEC’s ethics office warned Hinman about his involvement with the Ethereum-friendly law firm.
In its statement, the Office of Government Ethics does not regard digital assets as “publicly traded securities.” Of course, OGE is not a securities regulator.
Only the SEC is authorized to define an asset as a security. OGE acknowledges this, expressing its view only “for purposes of OGE’s regulations” and merely to disqualify crypto assets for the de minimis exemptions. The OGE decided that this non-security definition applies equally to digital assets and stablecoins.
Established de minimis exemptions still apply to holdings in non-crypto, publicly traded stock of companies that developed or are developing digital assets like stablecoins. The OGE also make allowances for holdings in a mutual fund if total holdings in all sector funds in the same sector sum to less than $50,000.
Finally, it exempts holdings in mutual funds that are diversified across multiple sectors.