An Overlooked Hurdle in Shaping Smart Crypto Policies: The Ethics Rule Hindering Tech Expertise

As the federal agencies prepare for new leadership, a little-known ethics rule poses a significant threat to the incoming administration's ability to craft effective digital asset policies. The Legal Advisory 22-04, issued by the Office of Government Ethics in 2022, has largely gone unnoticed as part of the Biden administration's restrictive stance on crypto. However, its impact could be substantial: it essentially prohibits anyone holding cryptocurrencies, tokens, or stablecoins from serving in the federal government. For an administration that vowed to restore the US's competitive edge in financial innovation, this presents an immediate challenge. Key agencies such as the Treasury, SEC, CFTC, and the Federal Reserve will require officials well-versed in both traditional finance and digital assets. Nevertheless, the current ethics guidance forces potential appointees and civil servants to make an impossible decision: either divest from the sector entirely or opt out of public service. The irony is striking, as a Treasury official can hold investments in JP Morgan while working on banking policy but is barred from holding any amount of bitcoin while working on digital asset regulation. Similarly, a SEC lawyer can own mutual funds while reviewing securities cases but cannot hold even a small amount of stablecoins. This creates an artificial barrier to recruiting experts at a time when their expertise is most needed. As the Senior Director of Industry Affairs at the Blockchain Association, I work with over 100 member companies at the forefront of financial innovation. Many of our members have professionals with extensive government experience who could provide valuable insights to federal service. However, under the current rules, their expertise remains inaccessible unless they are willing to completely divest from the industry they know best. A straightforward solution exists: the Office of Government Ethics should modify its guidance to permit 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 incoming administration could simply rescind the advisory via executive order, a quick win that would signal a more balanced approach to crypto policy. The stakes are high, as countries like Singapore, Switzerland, and the UAE are racing to establish clear regulatory frameworks for digital assets. The US government needs officials who understand both the opportunities and risks. Maintaining an overly broad ethics rule not only hampers agencies but also undermines America's ability to lead in financial innovation. For an administration focused on effective governance and American leadership in technology, addressing this barrier should be an early and easily achievable priority. The alternative is watching crucial positions go unfilled or, worse, filled by those with limited understanding of one of the most transformative technologies of our time.