As federal agencies prepare for new executive leadership, an obscure ethics rule threatens to cripple the incoming Trump administration’s ability to develop robust digital asset policy. Legal Notice 22-04, issued by the Office of Government Ethics in 2022, has largely gone unnoticed as part of the Biden administration’s restrictive approach to cryptocurrencies. However, its impact could be profound: it effectively excludes anyone holding cryptocurrencies, tokens or stablecoins from federal service.
For an incoming administration that has promised to restore American competitiveness in financial innovation, this presents an immediate challenge. Key agencies like the Treasury, SEC, CFTC, and Federal Reserve will need officials who understand both traditional finance and digital assets. But current ethical guidelines force prospective civil servants and civil servants to make an impossible choice: divest from the sector entirely or stay out of public service.
The irony is surprising. A Treasury official can hold investments in JP Morgan while working on banking policy, but cannot hold any amount of bitcoins while working on digital asset regulation. An SEC attorney can own mutual funds while reviewing securities cases, but can’t own even $100 in stablecoins. This creates an artificial barrier to hiring experts precisely when their expertise is most needed.
As Senior Director of Industry Affairs at the Blockchain Association, I work with over 100 member companies at the forefront of financial innovation. Many of our members include professionals with deep government experience who could bring valuable expertise to federal service. However, under current rules, their expertise is still off-limits unless they are willing to completely divest from the industry they know best.
There is a simple solution: The Office of Government Ethics should modify its guidelines to allow de minimis holdings of digital assets, similar to existing rules for traditional financial instruments. This would maintain ethical standards while opening the door to much-needed expertise. Alternatively, the incoming administration could simply rescind the notice via executive order, a quick victory that would signal a more balanced approach to crypto policy.
There is a lot at stake. As countries like Singapore, Switzerland and the United Arab Emirates rush to establish clear regulatory frameworks for digital assets, the US government needs officials who understand both the opportunities and the risks. Maintaining too broad an ethical standard not only harms agencies: it undermines the United States’ ability to lead financial innovation.
For an incoming administration focused on effective governance and American leadership in technology, addressing this barrier should be an early and easy-to-achieve priority. The alternative is to see crucial positions left vacant or, worse, filled by people with a limited understanding of one of the most transformative technologies of our time.
