The code of ethics is to block tech talent

As federal agencies prepare for new executive leadership, an uncertain ethics rule casts doubt on the incoming Trump administration’s ability to develop sound digital asset policies. Legal advice 22-04Released in 2022 by the Office of Government Ethics, it has largely flown under the radar as part of the Biden administration’s restrictive approach to crypto. But its impact could be profound: it would ban anyone holding cryptocurrencies, tokens or stablecoins from federal service.

This poses an immediate challenge for the incoming administration, which has pledged to restore America’s competitiveness in financial innovation. Key agencies such as the Treasury, SEC, CFTC and Federal Reserve will need officials who understand both traditional finance and digital assets. But current ethics guidance forces potential appointees and public officials to make an impossible choice: leave the sector entirely or stay out of public service.

The irony is shocking. A Treasury official can hold a JP Morgan investment while working on bank policy, but they can’t hold any bitcoins while working on digital asset regulation. An SEC lawyer can hold mutual funds while handling securities cases, but they can’t hold even $100 in stablecoins. This creates an artificial barrier to hiring professionals 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 can provide valuable insight to the federal service. But under current rules, unless they’re willing to completely abandon the industry they know best, their experience remains limited.

There is a straightforward solution: The Office of Government Ethics should change its guidelines to allow for minimum holdings of digital assets, similar to existing rules for traditional financial instruments. This allows for much-needed expertise while maintaining ethical standards. Alternatively, the incoming administration could simply overrule the council via executive order — a quick win that would mean a more balanced approach to crypto policy.

The stakes are high. As countries like Singapore, Switzerland and the UAE race to create a clear regulatory framework for digital assets, the US government needs officials who understand both the opportunities and the risks. Enforcing an overly broad ethics rule would not only harm agencies, but also undermine America’s ability to lead in financial innovation.

Addressing this obstacle should be an early, easy-to-achieve priority for an incoming administration focused on effective governance and American leadership in technology. The alternative is to see critical positions go unfilled or, worse, be filled by those who do not understand one of the most transformative technologies of our time.