Under new restrictions that went into effect Friday, Federal Reserve officials would be unable to trade a variety of assets, including equities and bonds, as well as cryptocurrency.
The governing Federal Open Market Committee declared that the majority of the limitations will take effect on May 1st, following regulations announced in October. FOMC officials, regional bank presidents, and a slew of other officials, which include bond desk managers, staff officers, & Fed personnel who regularly visit board meetings, will be subject to the new regulations. They cover spouses and young children as well.
“After further evaluation and analysis,” the Federal Reserve wrote in a handout announcing the rules, “the Federal Reserve believes that extra staff would become liable to all or portions of these standards.”
Ban On Crypto
The extension of the prohibition to cryptocurrencies like bitcoin, which had not been addressed in the original notification in October, was announced on Friday.
Officials who still retain market holdings will have another 12 months to sell them, according to the regulations. The fresh Fed officials will now have six months to accomplish this.
Officials subject to the new guidelines will have to give 45 days notice prior to making any permitted asset purchases in the future, a requirement that will take effect on July 1. They must then keep such holdings for at least a year and be prohibited from trading during “periods of increased financial market stress.” There is no standard meaning of the phrase; the Fed chair, as well as the board’s general counsel, will decide.
Crypto: Margin Loans
Commodities, sector index funds, foreign currencies, derivatives, short positions, and agency securities, as well as using margin loans to buy assets, are all prohibited.
The central bank’s inspector general is conducting an investigation, and Democratic Senator Elizabeth Warren has termed for a Securities and Exchange Commission investigation into Fed officials’ trading activities to see if any previous trades broke insider trading rules.
In response to a Freedom of Information Act request from Reuters last week, the Fed said it has about 60 pages of correspondence in between ethics officials and policymakers about financial transactions conducted in 2020, but “denied in full” to publish the data, citing waivers under the Information Act which said it did apply in this case, reports Reddit.com
