Federal Reserve officials banned from trading stocks and crypto

As of May 1, Federal Reserve officials will no longer be allowed to trade stocks, bonds and cryptocurrencies.


New rules for civil servants

Reports surfaced last year. It claimed that many top Federal Reserve officials were trading stocks, bonds and real estate securities in 2020. Some policymakers resigned after the revelations.

Federal Reserve chairman Jerome Powell urged the monetary body to adopt new rules to counter these problems. As such, in October, the Federal Open Market Committee proposed rules that would prohibit senior bank officials from dealing with the aforementioned assets.

A few months after introducing the first draft to ban Fed officials from owning certain assets, the policy-making Federal Open Market Committee updated the document to include cryptocurrencies.


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Tightened rules

The Federal Reserve went one step further. The bank did this in the latest amendment that came out on Friday and which has already become formal. For example, senior officials will be prohibited from buying individual stocks or funds that track corporate sectors. They will also not be able to invest in individual bonds, commodities, foreign currencies and cryptocurrencies. Remarkably, digital assets were not mentioned in the first draft.

The new rules also mean that officials with market positions have one year to get rid of the banned positions.

From July 1, top officials covered by the new rules will be required to provide 45 days’ notice of permitted purchases. Also, they must hold those assets for at least one year. According to the statement:

The new rules, the statement said, aim to bolster public confidence in the impartiality and integrity of the commission’s work by guarding against even the appearance of a conflict of interest.

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