The U.S. government has banned employees working on regulations and policies affecting digital assets from owning cryptocurrencies.
The government’s Office of Government Ethics (OGE) has established new rules citing what is essentially a conflict of interest.
The regulation covers many aspects related to the crypto market, including stablecoins. The notice reads:
“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 notice states that the de minimis exemption — which allows for the owners of securities who hold an amount below a certain threshold to work on policy related to that security — is universally inapplicable when it comes to cryptocurrencies and stablecoins.
Rule applies to all government agencies
However, government employees will be allowed to work on related policies if they divest their holdings. The rule will apply to all federal government agencies, including the United States Treasury, the Federal Reserve, and the White House.
There is one notable exception to this rule: government employees can hold up to $50,000 in mutual funds in companies that are working in the crypto space, or close to it.
The United States has ramped up regulation of the crypto market in the past 18 months. Several of these developments have happened in the last six months, as the government aims to protect investors and prevent criminal activity.
Stablecoins are a prime target for regulation, with the recent TerraUSD (UST) crash fresh in lawmakers’ minds. The Federal Reserve is considering a CBDC, which some say can coexist with stablecoins, though panelists at a recent conference said that the scope for cross-border applications was limited.
The United States Securities and Exchange Commission (SEC) is currently conducting a number of investigations into cryptocurrencies.