US ethics body demands federal employees disclose crypto holdings
The US Office of Government Ethics (OGE) has included cryptocurrencies for the first time among the financial holdings federal employees must declare on their financial disclosure reports.
Recognising the surge in the use of and access to digital assets such as coins and tokens, the OGE said federal employees were increasingly seeking guidance from their ethics officials concerning their disclosure obligations.
Ethics in Government Act
Acting under the Ethics in Government Act (EIGA) the OGE said: “A significant characteristic of digital assets, including virtual currencies, is their capacity to act as an investment asset through which holders may expect to generate investment income.
“OGE, therefore, regards a holding in virtual currency as an interest in property held for investment or the production of income.”
The EIGA states: “Employees must report any interest in property held for investment or the production of income.”
The following guidelines were issued by the OGE on Monday:
- Filers report their holdings in a virtual currency if the value of the virtual currency holding exceeded $1,000 at the end of the reporting period, or
- If the income produced by the virtual currency holding exceeded $200 during the reporting period
- Filers are required to identify the name of the virtual currency and, if held through an exchange or platform, the exchange or platform on which it is held
There has been much debate over whether certain cryptocurrencies should be regarded as securities, however. The Securities and Exchange Commission, for example, believes assets such as bitcoin and ethereum act more like commodities and should, therefore, not be considered as securities. Initial coin offerings (ICOs), however, which distribute tokens as security to raise cash, are regarded as securities.
To this end, the OGE demanded: “If a virtual currency or digital asset is a security, filers should report purchases, sales, or exchanges of that asset.”
Conflicts of interest
Like any property or asset held for investment, the OGE recognised that some conflicts of interest may arise for employees who own cryptocurrencies and stipulated there should be no exemptions for such assets.
It added: “Agency ethics officials should, therefore, analyse whether their employees’ official duties would have an effect on the value of their virtual currency, just as they would any other property held for investment or the production of income.
“They should also alert their employees to the potential conflict of interest risk posed by ownership of virtual currency.”