Federal Reserve Adopts Rules Banning Officials From Holding Cryptocurrencies
On February 18, the Federal Open Market Committee (FOMC) formally adopted rules prohibiting senior Federal Reserve officials from purchasing individual stocks or sector funds and holding investments in cryptocurrencies, among other categories of assets. Senior officials are also prohibited from entering into derivatives contracts and engaging in short sales or purchasing securities on margin.
The FOMC is the monetary policymaking body of the Federal Reserve System and is composed of 12 members.
The rules were originally introduced in October 2021 and “aim to support public confidence in the impartiality and integrity of the Committee's work by guarding against even the appearance of any conflict of interest,” according to the FOMC.
The new rules apply to FOMC board members, Federal Reserve presidents, first vice presidents, Reserve Bank research directors, FOMC staff officers, the manager and deputy manager of the System Open Market Account, Board division directors who regularly attend Committee meetings, any other individual designated by the Chair, and to the spouses and minor children of these individuals. The FOMC also indicated that additional staff would become subject to the new rules.
Officials covered by the rules will have 12 months from the effective date of the rules to dispose of any impermissible holdings and any newly covered officials will have 6 months to dispose of all impermissible holdings.
The rules will take effect on May 1, 2022.
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