The US Office of Government Ethics (OGE) has issued guidance to government employees stating that, for the time being, the OGE regards cryptocurrencies as investments and Government employees must disclose their holdings.
A document entitled, “Guidance for Reporting Virtual Currency on Financial Disclosure” issued June 18th by the OSC states that:
“The (EIGA) Ethics in Government Act requires employees to report, “any interest in property held . . . for investment or the production of income…” (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.”
The document states that the Ethics Office has received inquiries from government employees unclear about how cryptocurrency holdings are perceived. There is some basis for the confusion.
Although Bitcoin was designed as a “peer-to-peer electronic cash system,” due to issues with scaling and adoption, for long term holders, bitcoins have functioned mainly as deflationary “stores of value.”
Since the creation of Bitcoin in 2009, thousands of private companies have issued crypto “tokens” and “coins” to raise funds and have attempted to skirt securities regulations by emphasizing the eventual “network utility” of those items.
No crypto networks have yet evolved into comprehensive and efficient alternative payment systems.
Although it, “does not consider virtual currency a ‘real’ currency or legal tender,” the OGE admits there has been some confusion and discrepancy regarding how these new instruments function:
“While virtual currency may act as a medium of exchange or substitute for real currency, it may also function as a commodity, the basis for a derivative contract, security, or other investment instrument, depending on how it is designed, issued, promoted, distributed, and used by participants in the community.”
And though the, “OGE…(therefore) recognizes that virtual currency is a relatively new and still evolving financial instrument whose final form and function may yet change,” for the time being it will operate according to designations set by the IRS, CFTC and SEC, all of which have explicitly classed “cryptocurrencies” as assets and investments, not currencies. Therefore:
“(T)he reporting and conflict of interest principles set forth herein apply equally to (cryptocurrenics and) other digital assets, such as “coins” or “tokens” received in connection with initial coin offerings or issued or distributed using distributed ledger or blockchain technology…”
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