As a new presidential administration prepares to take the reins in Washington, a little-known government ethics rule threatens to severely handicap the development of sound cryptocurrency policy. Legal Advisory 22-04, quietly issued by the Office of Government Ethics (OGE) in 2022, bars federal officials from holding any digital assets – including cryptocurrencies, tokens, or even stablecoins. The impact could be devastating, locking out the very expertise needed to regulate this rapidly evolving industry.
The Impossible Choice for Crypto Talent
For professionals steeped in the world of digital assets, the OGE advisory presents a stark ultimatum: divest entirely or stay out of public service. This creates an artificial barrier to recruiting the best and brightest minds precisely when their insights are most critical.
The double standard is glaring. A Treasury official can hold stock in JPMorgan while shaping banking rules, but they can’t own a single bitcoin while working on crypto policy. An SEC lawyer can invest in mutual funds while overseeing securities cases, but $100 in stablecoins would disqualify them. How can agencies craft effective regulations without tapping those who understand the technology best?
Expertise Sidelined by Overreach
As global competition heats up in the race to build crypto-friendly regulatory frameworks, the U.S. government urgently needs policymakers who grasp the nuances of this transformative technology. Yet the current OGE guidance sidelines that vital expertise unless individuals are willing to completely divest from an industry they know inside and out.
A Treasury official can hold investments in JP Morgan while working on banking policy, but they can’t hold any amount of bitcoin while working on digital asset regulation.
– Dan Spuller, Blockchain Association
A Simple Fix to Tap Crucial Knowledge
The solution is straightforward: modify the OGE guidance to allow reasonable de minimis holdings of digital assets, just as the rules permit for traditional financial instruments. This measured approach would uphold strong ethical standards while opening the doors to public service for those with deep crypto expertise.
Alternatively, the new administration could rescind the overly broad advisory entirely through an executive order – an early win that would signal a more innovation-friendly approach. With rival nations moving swiftly to establish clear crypto regulatory frameworks, the U.S. can ill afford policies that push industry-savvy talent away.
Seizing the Moment for Smarter Policy
The incoming administration has pledged to restore U.S. leadership in emerging technologies and implement more effective governance. Addressing the unintended consequences of the OGE crypto rules offers a perfect opportunity to translate those promises into action.
By modifying or rescinding the ethics advisory, the new leadership can ensure that the agencies charting the future of crypto policy—from the Treasury and SEC to the CFTC and Federal Reserve—have access to officials who understand the technology’s potential and pitfalls. The alternative is watching from the sidelines as other nations take the lead in the digital assets revolution.
In the dynamic world of cryptocurrency, expertise is a precious commodity. The U.S. government has a critical window to tap that knowledge and craft policies that balance innovation and oversight. Reforming the OGE’s overreaching rules on digital asset ownership is an essential first step – one the new administration can ill afford to neglect.