The Federal Open Market Committee, or FOMC, has approved rules which would ban senior officials at the Federal Reserve from purchasing and holding cryptocurrencies and other investments.
In a Friday announcement, the FOMC said that starting on May 1, senior Federal Reserve officials already working at the agency would have one year to “dispose of all impermissible holdings,” while new officials would have six months to do so. The new rules specify that Fed senior officials, which include Reserve Bank first vice presidents and research directors, FOMC staff officers, the System Open Market Account manager and deputy manager, Board division directors who regularly attend Committee meetings, individuals designated by the Fed chair, and their spouses and children under 18 are:
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“Prohibited from purchasing individual stocks or sector funds; holding investments in individual bonds, agency securities, cryptocurrencies, commodities, or foreign currencies; entering into derivatives contracts; and engaging in short sales or purchasing securities on margin.”
Under the rules, starting on July 1 purchasing and selling securities will be permitted with 45 days’ notice, prior approval, and agreement to hold the investment for at least one year. In addition, officials are also prohibited from purchasing and selling during “periods of heightened financial market stress.” Reserve Bank presidents will have 30 days to disclose securities transactions, which will be available to the public “promptly” on their respective Fed websites.
“The Federal Reserve expects that additional staff will become subject to all or parts of these rules after the completion of further review and analysis,” said the announcement.
FOMC formally adopts comprehensive new rules for investment and trading activity: https://t.co/NOPJbWwCdn
— Federal Reserve (@federalreserve) February 18, 2022
According to the FOMC, the change in rules — first announced in October 2021 — was intended 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.” The Federal Reserve Board will also vote on including the changes in codes of conduct at Reserve Banks.
Related: House members call for an end to lawmakers trading stocks — is crypto next?
Many U.S. lawmakers have called for legislation to prohibit members of Congress from owning or trading stocks, citing similar concerns. Under the 2012 Stop Trading on Congressional Knowledge Act, or STOCK Act, lawmakers are permitted to buy and trade stocks and other investments while in office, but are also bound to disclose such actions or face financial penalties.