U.S. Fed top officials can't trade crypto, stocks, and bonds

As of Friday, FOMC members announced that employees already at the Fed have one year to "dispose of all impermissible holdings," whereas new employees have six months to comply.

U.S. Fed top officials can't trade crypto, stocks, and bonds

Senior members of the Federal Reserve have been prohibited from buying and holding crypto assets and other investments by rules approved by the Federal Open Market Committee, or FOMC.

As of Friday, FOMC members announced that employees already at the Fed have one year to "dispose of all impermissible holdings," whereas new employees have six months to comply.

Senior Fed officials, including Reserve Bank first vice presidents and research directors, FOMC staff officers, the manager, and deputy manager of the System Open Market Account, Board division directors who regularly attend meetings of the Committee, as well as their spouses and dependent children under 18, fall under this new rule, which states:

It is not permitted to invest in individual stocks or sector funds, hold individual bonds, agency securities, cryptocurrencies, commodities, or foreign currencies, enter into derivative contracts, engage in short sales, or purchase securities on margin.

Beginning July 1, securities purchases and sales will require at least 45 days' notice, prior approval, and an agreement to hold the investment for at least one year.

Additionally, officials are prohibited from buying and selling securities during "periods of heightened financial market stress." Reserve Bank presidents must disclose securities transactions within 30 days, which will be made public on their respective federal websites.

As a result of further review and analysis, additional Federal Reserve staff is expected to become subject to all or parts of these rules, stated the announcement.

By safeguarding against even the appearance of conflicts of interest, the FOMC's change in rules–which was announced in October 2021–was intended to advance public confidence in the Committee's impartiality and integrity.

The inclusion of the changes to the Reserve Bank conduct codes will also be on the agenda.

Similar concerns have led many lawmakers to call for legislation prohibiting members of Congress from owning or trading stocks.

A law called the Stop Trading on Congressional Knowledge Act, or STOCK Act, allowed lawmakers to sell and buy stocks while in office. However, such actions had to be disclosed or lawmakers would face financial penalties.