As the landscape of the federal government reshuffles with the oncoming Trump administration, an unexpected hurdle has emerged: Legal Advisory 22-04. Issued by the Office of Government Ethics in 2022 as part of the Biden administration’s restrained approach to cryptocurrency, this hitherto unnoticed rule could have far-reaching implications. In essence, it strictly forbids anyone in federal service from holding cryptocurrencies, tokens, or stablecoins.
This poses a significant challenge for the incoming administration, which has pledged to reinvigorate American competitiveness in financial innovation. Central agencies such as the Treasury, SEC, CFTC, and the Federal Reserve will require officials who are not only proficient in traditional finance but also well-versed in digital assets. However, the present ethics guidance puts potential appointees and civil servants in a quandary, forcing them to either divest entirely from the sector or refrain from public service.
The incongruity of this situation is glaring. It is perfectly acceptable for a Treasury official to retain investments in JP Morgan while formulating banking policy, but they are prohibited from holding even a small amount of bitcoin while drafting digital asset regulation. A SEC lawyer can own mutual funds while scrutinizing securities cases, but they cannot possess even $100 in stablecoins. This creates an unjustified obstacle to recruiting experts exactly when their expertise is crucial.
As the Senior Director of Industry Affairs at the Blockchain Association, I work with over 100 member companies at the cutting-edge of financial innovation. Many of our members are seasoned professionals with rich government experience, capable of rendering invaluable insights to federal service. Yet, under the current rules, their expertise remains untapped unless they are ready to completely divest from the industry they understand best.
The solution is simple and straightforward: The Office of Government Ethics should revise its guidance to permit de minimis holdings of digital assets, mirroring existing rules for traditional financial instruments. This will maintain ethical standards while paving the way for much-needed expertise. Alternatively, the incoming administration could rescind the advisory via an executive order, signaling a more balanced approach to crypto policy.
The stakes indeed are high. As nations like Singapore, Switzerland, and the UAE forge ahead with clear regulatory frameworks for digital assets, the U.S. government needs officials who grasp both the opportunities and risks. Adhering to an overly broad ethics rule not only hampers agencies but also compromises America’s ability to lead in financial innovation.
For an incoming administration intent on effective governance and American leadership in technology, addressing this issue should be an early, achievable priority. The alternative is to see crucial positions remain vacant or, worse, occupied by individuals with a limited understanding of one of the most revolutionary technologies of our time.
