US Fed Officials Banned From Trading Cryptocurrencies
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The United States Federal Reserve (Fed) – the country’s central bank – is banning its high-ranking officials from trading cryptocurrencies and other assets.
Under the new policy, formally announced last Friday (18), in addition to crypto assets, employees are also banned from trading commodities, foreign currencies, sector index funds, derivatives and agency bonds.
In addition, they cannot trade with leverage or short sales.
Banned from trading cryptocurrencies
Although it was announced last week, the determination will not take effect until May 1, 2022.
Employees must dispose of their assets within 12 months of the effective date. In some cases, employees will have six months to dispose of their assets.
Included in the policy are Fed officials; presidents of regional banks such as those of the Fed in Boston or St. Louis; securities desk managers and other employees.
In addition, the ban will extend to the Federal Open Market Committee. This committee is a high-ranking group that sets financial policy and sets interest rates.
Also, relatives of employees, such as spouses and children under the age of 18, will also be prohibited from trading the assets.
It is possible that other classes of employees will be included in the determination in the future, as the Fed stated:
“The Federal Reserve expects additional employees to be subject to all or parts of these rules upon completion of further reviews and analysis,” a statement announcing the rules said.
According to the Fed, the rule aims to improve public trust in the institution. The aim, according to the announcement, is “to support the public’s confidence in the impartiality and integrity of the Committee’s work, while protecting itself from even the appearance of any conflict of interest.”
This policy change follows a controversy over insider trading within the Federal Reserve in 2020.
At the time, Dallas Fed Chairman Robert Kaplan and Boston Fed Chairman Eric Rosengren were both in the media spotlight. Eric Rosengren and Robert Kaplan left their positions after the controversy.
