US federal employees with digital assets shouldn’t work on crypto policy, ethics office warns

Government employees who own digital assets like cryptocurrencies or stablecoins may not work on matters that could have a “direct and predictable effect” on the value of their assets, according to a new legal advisory from the US Office of Government Ethics.

The Office of Government Ethics oversees the executive branch ethics program across more than 130 agencies. The legal opinion comes as cryptocurrency gains mainstream popularity, and Washington eyes regulating digital assets. 

Cryptocurrencies and stablecoins do not meet the office’s definition of “publicly traded securities, according to the advisory, which was penned by Office of Government Ethics Director Emory A. Rounds III and published on Tuesday. 

“An employee who holds any amount of a cryptocurrency or stablecoin may not participate in a particular matter if the employee knows that particular matter could have a direct and predictable effect on the value of their cryptocurrency or stablecoins,” the advisory says.

The Office of Government Ethics did not respond to a request for comment. 

The advisory also addressed employee stock interests in public and private companies. Regulatory exemptions do cover “publicly traded securities” companies that develop cryptocurrency or stablecoins, but do not apply to equity ownership in private companies.

The executive branch ethics program aims to “prevent financial conflicts of interest to help ensure government decisions are made free from personal financial bias,” according to the Office of Government Ethics website.

An employee who owns a mutual fund with “a stated purpose of concentrating investments in cryptocurrencies, stablecoins, cryptocurrency or stablecoin derivatives, or cryptocurrency or stablecoin services” may only participate in a matter that affects one or more of its holdings if the employee has less than $50,000 in all mutual funds that concentrate in the same financial services sector, according to the advisory.

Government agencies should look closely at crypto- or stablecoin-related funds to determine how to move ahead with employees, the advisory warned. 

“Although it is sometimes possible to identify whether a fund is a diversified or sector fund based on the fund name, a number of similarly named blockchain and digital asset funds have adopted widely divergent investment strategies, resulting in some qualifying as sector funds and some as diversified funds,” the advisory said.

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