The US Commodity Futures Trading Commission (CFTC) allowed its employees to invest in cryptocurrencies, including Bitcoin. However, as trading of Bitcoin futures is under agency’s surveillance, the activity is off-limits. According to Bloomberg, citing an internal memo, employees cannot purchase cryptocurrencies on margin or use inside information towards their trading.
Daniel Davis, the CFTC general counsel, stated that the agency reviewed its ethics guidelines after receiving many staff’s inquires asking if they could buy digital tokens.
According to the memo, the cryptocurrencies are considered as commodities, so employees could invest in them just like their investments in gold or oil. However, the guidelines are not explicit on forbidding workers from trading tokens on inside information.
Davis noted in the memo:
“In this environment, the situation is ripe for the public to question the personal ethics of employees engaging in cryptocurrency transactions. Please keep in mind that you must endeavor to avoid any actions creating the appearance that you are violating the law or government and commission ethical standards.”
The US Securities and Exchange Commission (SEC) also allows its staff to trade cryptocurrencies, but it does not regulate them as CTCF does for the futures. It mostly focused on Initial Coin Offerings (ICOs) with its employees cannot invest in tokens for seven days after an ICO event.
Many experts, including attorneys dealing with government ethics, seem to disagree with the CFTC decision.
Richard Painter, a former White House ethics lawyer, stated that the CFTC should regulate cryptocurrencies and not allow its employees to speculate on them. “This just looks terrible,” he added.
Angela Walch, an associate professor at St. Mary’s University School of Law, commented as follows:
“This is actually mind-boggling that they are allowing investing in this at all. It could absolutely skew their regulatory decisions.”
Erica Richardson, a representative for CFTC chairman J. Christopher Giancarlo, told Bloomberg he “has made it clear that staff members who own Bitcoin should not participate in matters related to Bitcoin, as it presents a conflict of interest.”