The Federal Open Market Committee (FOMC) has passed rules prohibiting senior Federal Reserve (Fed) officials from buying and holding cryptocurrencies and other assets.
“FOMC formally adopts sweeping new investment and trading rules,” announced the Federal Reserve. tweet.
In an announcement on Friday, the FOMC said Beginning May 1, senior Fed officials working at the agency have a year to “dispose of all unauthorized holdings,” while new officials have just six months. New rules specify that Senior Fed officials, including the Reserve Bank’s first vice president and director of research, FOMC staff, the director and deputy director of System Open Market Accounts, and the division head of the board regularly attend committee meetings, persons designated by the Fed chairman and their spouses, and Children under 18 years:
“It is prohibited to purchase individual stocks or sector funds, hold investments in individual bonds, agency securities, cryptocurrencies, commodities or foreign currencies, enter into derivative contracts and engage in transactions that short sell or buy margin securities.”
Under the rules, starting July 1, buying and selling securities is allowed, but with 45 days’ notice, prior approval, and an agreement to hold the investment for at least a year. In addition, officials are also prohibited from buying and selling during “times of financial market stress”. Reserve bank governors have 30 days to announce the securities transaction, which will be posted “immediately” on respective Fed websites.
“The Federal Reserve expects other employees to be subject to this rule in whole or in part upon completion of further review and analysis,” the statement said.
According to the FOMC, the amended rules (first announced in October 2021) are intended to “increase public confidence in the fairness and integrity of the commission’s work by guarding against the appearance of a conflict of interest.” The Federal Reserve Board will also vote to make changes to the reserve banks’ code of conduct.
Many US lawmakers have phone call enacted legislation banning members of Congress from owning or trading stocks, citing similar concerns. Under the 2012 stop-out provision in the Congressional Knowledge Act or the Securities Act, legislators may buy and trade stocks and other investments during their term in office, but also have an obligation to conserve, disclose, or face fines for such actions.
Cynthia Lummis, a Republican US Senator from Wyoming, believes the Federal Reserve (Fed) should consider keeping Bitcoin on its balance sheet. During the Orrin G. Hatch Foundation’s crypto webinar, Lummis said that once the regulatory guideline is in place, it “will make a lot of sense.”
Cynthia Lummis, Republican United States Senator
This week, the Orrin G. Hatch Foundation released a webinar video featuring Bitstamp CEO Bobby Zagotta, former Fed Vice President Randal Quarles, and Republican Wyoming Senator Cynthia Lummis. Webinar host Matt Sandgren mentioned to Quarles that in its early days, Bitcoin was met with skepticism by Washington and Wall Street. Sandgren added that things appear to be changing now, and he asked the former Fed Vice Chairman if he agreed that views had changed.
Quarles replied:
“I think in the early years, the widespread use of bitcoin and crypto wasn’t really clear. They solved some technical problems in the payment system, but price volatility made them unsuitable as a de facto payment mechanism. So the main attractions seem to be independence from a regulated monetary system and anonymity. None of this will have tremendous appeal for Washington.
As a Wall Street investor, if you’re considering a new technology with an obscure use case that could potentially draw unwanted attention from regulators and law enforcement, you’ll slow down.”
Quarles then said things are changing now for a few reasons and one of them involves stablecoins. He thinks stablecoins are more useful because they “tame volatility.”
Following Quarles’ explanation and Bitstamp’s Zagotta description of the cryptocurrency, Lummis told Sandgren that she thinks the Fed buying Bitcoin and holding it on the balance sheet is a “great idea.”
“Once a legal and regulatory framework is in place, it makes a lot of sense. Because Bitcoin is completely decentralized, it will only become more popular over time. I think the Fed should keep bitcoin on their balance sheet.”
Senator Cynthia Lummis has been a fan of Bitcoin and digital currencies for quite some time. She recently thanked God for Bitcoin as the US Congress debated raising the debt ceiling. In the first week of October, Lummis announced that she was buying more bitcoin, considering BTC a “great store of value.”
However, the Quarles panel spokesman contradicted Lummis’s comments, stressing that the US Federal Reserve is unlikely to add BTC to its balance sheet.
“For various political and economic reasons, I think it’s best to keep the Fed’s balance sheet intact.”
In her statements, Lummis reiterated that she believes Bitcoin is a predictable, scarce, and valuable store.
“Bitcoin is digital gold. It is a fixed supply coin, only 21 million will be produced,” Lummis pointed out during the webinar.
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