Fed Bans Senior Officials From Cryptocurrency Investing – Senior personnel at the Federal Reserve have been prohibited from investing in bitcoin. The Federal Open Market Committee stated, “Officials covered by the new rules will have 12 months from the effective date of the rules to dispose of all impermissible holdings.”
Last Friday, the Federal Open Market Committee (FOMC) declared that it had “unanimously formally adopted extensive new rules for senior officials’ investment and trading activity.”
The FOMC is a committee of the Federal Reserve System of the United States that is in charge of managing the country’s open market activities.
The regulations were first announced in October of last year, with the goal of improving “the impartiality and integrity of the Committee’s work by preventing against the appearance of any conflict of interest,” according to the release.
Senior Federal Reserve officials are now prohibited from investing in individual bonds, cryptocurrencies, agency securities, commodities, or foreign currencies under the new guidelines.
They’re also prohibited from “buying individual stocks or sector funds,” “getting into derivatives contracts,” and “participating in short sales or margin purchases.” The October announcement made no mention of cryptocurrency.
Reserve Bank presidents, board members, first vice presidents, FOMC staff officers, research directors, the manager and deputy manager of the System Open Market Account, board division directors who regularly attend Committee meetings, and the spouses and minor children of these individuals are all subject to the new rules.
Following further review and analysis, the Federal Reserve anticipates the restrictions to apply to more employees.
The limits are the result of a dispute last year in which many senior Fed officials traded stocks and other investments just before the central bank implemented extensive measures to help the economy recover from the Covid-19 crisis.
Following the controversy, both Eric Rosengren, president of the Federal Reserve Bank of Boston, and Robert Kaplan, president of the Federal Reserve Bank of Dallas, left their positions.
The Federal Open Market Committee explained:
Officials who are subject to the new restrictions will have 12 months from the date they take effect to dispose of all illegal holdings.
“Newly covered officials will have six months to dispose of all ineligible holdings,” the FOMC said, adding that the guidelines will go into effect on May 1.