As federal agencies prepare for new executive leadership, an obscure ethics rule threatens to cripple the incoming Trump administration’s ability to develop strong digital asset policy. Legal Opinion 22-04, issued by the Office of Government Ethics in 2022, has gone largely unnoticed amid the Biden administration’s restrictive approach to crypto. However, its impact could be profound: it effectively prohibits access to the federal service to anyone holding cryptocurrencies, tokens or stable coins.
For a new 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 ethics guidelines force potential appointees and civil servants to make an impossible choice: disengage from the sector entirely or stay out of public service.
The irony is striking. A Treasury official can hold investments in JP Morgan while working on banking policy, but they cannot hold any amount of bitcoin while working on digital asset regulation. An SEC attorney can own mutual funds while reviewing securities filings, but they can’t even hold $100 in stablecoins. This creates an artificial barrier to recruiting experts precisely when their expertise is most needed.
As Senior Director of Industry Affairs at the Blockchain Association, I work with more than 100 member companies at the forefront of financial innovation. Many of our members include professionals with extensive government experience who could bring valuable insights to the federal service. Yet under current rules, their expertise remains off-limits unless they are prepared to completely disengage from the sector they know best.
There is a simple solution: The Office of Government Ethics should change 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 new administration could simply rescind the advisory by executive order – a quick victory that would signal a more balanced approach to crypto policy.
The stakes are high. As countries like Singapore, Switzerland, and the United Arab Emirates work to establish clear regulatory frameworks for digital assets, the U.S. government needs officials who understand both the opportunities and the risks. Maintaining an overly broad ethical rule not only handicaps the agencies: it undermines America’s ability to lead in financial innovation.
For a new administration focused on effective governance and American leadership in technology, overcoming this obstacle should be a quick and easy-to-achieve priority. The alternative is to see crucial positions go unfilled or, worse, be filled by people with a limited understanding of one of the most transformative technologies of our time.
