Federal employees must now report any crypto investments on their financial disclosure statements.
“OGE does not consider virtual currency a ‘real’ currency or legal tender,” stated the advisory. “Executive branch employees are therefore required to report their holdings of virtual currency on their public or confidential financial disclosure report, subject to applicable reporting thresholds for property held for investment or the production of income. Further, the reporting and conflict of interest principles set forth herein apply equally to 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.
The agency added that the new guidance was necessary because “virtual currencies are experiencing a surge in use and access, and as a result, employees who hold virtual currencies are increasingly seeking guidance from their ethics officials concerning their financial disclosure reporting obligations.”
Federal employees, especially those that handle the spending of money, must file annual financial disclosure forms, which their agencies will review for potential conflicts of interest and keep confidential. However, a smaller number of workers, mainly those at senior levels, will need to file more detailed forms, which will be made public.
The general rule states that employees must report their holdings in a virtual currency “if the value of the virtual currency holding exceeded $1,000 at the end of the reporting period or if the income produced by the virtual currency holding exceeded $200 during the reporting period. Filers are required to identify the name of the virtual currency and, if held through an exchange or platform, the exchange or platform on which it is held.”
Employees who file publicly will need to report certain purchases and sales of stocks and other forms of securities. However, those requirements will vary depending on whether a holding is considered a “security.”
In addition, virtual money “is an investment asset and, like other property held for investment, it may create a conflict of interest for employees who own it.” With that in mind, the OGE states that they do not fall under any of the exceptions to conflict of interest law.
“Agency ethics officials should therefore analyze whether their employees’ official duties would have an effect on the value of their virtual currency, just as they would any other property held for investment or the production of income. They should also alert their employees to the potential conflict of interest risk posed by ownership of virtual currency,” the agency said.
In the future, the OGE may issue further guidance “as the nature of virtual currency becomes better defined.”