Officials of the Federal Reserve are forbidden from trading crypto

Crypto trading has made many billionaires and millionaires over the past couple of years. As inflation across the world began to rise significantly amid the global COVID-19 pandemic, the entire digital ecosystem has successfully garnered mainstream attention. Following the potential of digital assets and tremendous price spikes, many seek to hold at least one type of cryptocurrency. However, the Federal Open Market Committee (FOMC) has approved rules that would ban senior officials at the FED from acquiring or holding crypto and other investments.

FED officials should dispose of their crypto holdings

The FOMC announced on Friday that from May, all senior FED officials who are working at the agency would have a year to dispose of their crypto holdings. Moreover, new officials will have only six months to do so.

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The latest rules specify that the US agency’s senior officials including the vice presidents and research directors, FOMC staff officers, the System Open Market Account manager and deputy manager, Board division directors who regularly attend Committee meetings, individuals designated by the Fed chair, and their spouses and children under 18 are prohibited from holding any impermissible asset.

Read More: US Senator Cynthia Lummis believes that the Fed should buy bitcoin

These officials are prohibited from acquiring individual stocks or sector funds. They cannot invest in individual bonds, agency securities, crypto, commodities, or foreign currencies. Furthermore, they cannot enter into derivatives contracts or engage in short sales or purchase any securities on margin.

Why did the FOMC introduce such rules?

Under the latest rules, the acquisition and selling of securities will be permitted with 45 days’ notice before approval and agreement to hold the investment for at least a year. Additionally, the FED senior officials cannot purchase or sell during heightened financial market stress periods.

Besides, the Reserve Bank presidents will only have a month to disclose securities transactions available to the public promptly on their respective FED websites. 

According to the announcement, the US FED expects that additional staff will become subject to all or parts of these rules after the completion of further review and analysis.

The FOMC claims that such rules are being introduced to support public confidence in the impartiality and integrity of the Committee’s work by guarding against even the appearance of any conflict of interest. Furthermore, the FED Board will also vote on including changes in codes of conduct at Reserve Banks.