As federal agencies prepare for new executive leadership, an obscure ethics rule threatens to hamstring the incoming Trump administration’s ability to develop sound digital asset policy. Legal Advisory 22-04, issued by the Office of Government Ethics in 2022, has flown largely under the radar as part of the Biden administration’s restrictive approach to crypto. Yet its impact could be profound: it effectively bars anyone holding cryptocurrencies, tokens, or stablecoins from federal service.
For an incoming administration that promised to restore American competitiveness in financial innovation, this presents an immediate challenge. Key agencies like Treasury, SEC, CFTC, and the Federal Reserve will need officials who understand both traditional finance and digital assets. But the current ethics guidance forces potential appointees and civil servants to make an impossible choice: divest entirely from the sector 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 can’t hold any amount of bitcoin while working on digital asset regulation. A SEC lawyer can own mutual funds while reviewing securities cases, but they can’t hold even $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 deep government experience who could contribute valuable insights to federal service. Yet under current rules, their expertise remains off-limits unless they’re willing to completely divest from the industry they know best.
There’s a straightforward solution: The Office of Government Ethics should modify its guidance 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 badly 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 race to establish clear regulatory frameworks for digital assets, the U.S. government needs officials who understand both the opportunities and risks. Maintaining an overly broad ethics rule doesn’t just handicap agencies – it undermines America’s ability to lead in financial innovation.
For an incoming administration focused on effective governance and American leadership in technology, addressing this barrier should be an early, easy-to-achieve 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.