Senior Federal Reserve Officials Banned from Holding Crypto as New Investing Restrictions Applied

The Federal Open Market Committee has announced new restrictions on senior Fed officials in regards to investing and trading activities.

According to a statement by the Fed, under the new rules, senior Federal Reserve officials are 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.

The updated rules follow a period of questionable investment activities by former Fed officials. This past January, Richard Clarida, the Fed Vice Chair, resigned early due to questions pertaining to trading affiliated with pandemic actions.

The agency stated that senior Federal Reserve officials will be required to provide 45 days’ non-retractable notice for purchases and sales of securities, obtain prior approval for such transactions, and hold investments for at least one year.

Additionally, purchases and sales also will be prohibited during periods of heightened financial market stress.

These rules are said to supplement existing rules that prohibit Federal Reserve officials from holding bank stocks and Treasury securities and from engaging in financial transactions during a blackout period around FOMC meetings.

Reserve Bank presidents will now be required to publicly disclose securities transactions within 30 days, as Board members and senior Board staff currently do. In addition, financial disclosures filed by Reserve Bank presidents will be promptly posted on the website of the relevant Reserve Bank. Financial disclosures filed by Board Members will continue to be available on the website of the Office of Government Ethics.

In addition to Board Members and Reserve Bank presidents, the new rules apply to Reserve Bank 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 Federal Reserve expects that additional staff will become subject to all or parts of these rules after the completion of further review and analysis.

Impacted individuals will have 12 months to comply with the new rules.


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