This new instruction came from the US Office of Government Ethics (OGE) on Tuesday. The regulation applies to staff who reported any digital assets in their possessions. Its implementation affects all federal workers, including The Federal Reserve, The Division of the Treasury, and even The White House,
An example of the case is a government official who owns $100 worth of stablecoins. When the official receives a task to work on stablecoin regulations, he can’t accept the task unless he gives up his asset. The notice further explained that the regulation still applies even if the digital asset in question has a security implication related to state or federal security laws.
The OGE gives exemption to government officials who own up to $50,000 in mutual funds that provide investment for companies benefitting from crypto and blockchain technology. It reasons that this is a diversification approach commonly done in investment. However, when the mutual funds go above $50,000, the ban applies.
US integration of cryptocurrency
To some parties, this approach seems tough but it shows the government’s commitment to integrating cryptocurrency into its economy. It is a follow-up to an Executive Order signed by President Joe Biden on March 9. The order ensures that the US government will develop digital assets responsibly.
This is a response to the growth of digital assets within the country and across the globe. In November 2016, the value of non-state digital assets reached US$14 billion. The number grew to US$3 trillion in November 2021. Such rapid development and lack of control call for “an evolution and alignment of the United States government’s approach to digital assets”.
The implementation of this EO is a complex task as several agencies must work together. Alexandra Barrage, former associate director at FDIC, explained that the process of gathering several agencies to work on this integration is “a testament to the fact that digital assets cross over so many issues, there is no one agency that can tackle it”.
Although the EO hopes to create a consistent regulation with a minimum gap, Peter Hardy from Ballard Spahr LLP, wrote that it “will be elusive in practice”. The crypto market changes quickly and the policies “will need to be constantly sprinting just to try to keep up”.
The current ban on cryptocurrency-owning US officials working in policies related to the crypto market is among the first steps that the government takes to regulate the digital asset market. In the upcoming months, the crypto community will learn new regulations. For now, the government interagency parties involved in the enactment of the EO are still compiling reports and supplements.
Cabital CEO Raymond Hsu said that the US might be the only Western country to fully integrate digital assets into its economic system. It is also the only country that introduces legislation to take control of this market.