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Fed bans employees from trading stocks and cryptocurrencies after scandals

Senior staff at the United States central banking system, the Federal Reserve (FED), will no longer be able to hold cryptocurrencies, among other assets such as stocks, according to an announcement made by the bank on Friday.

Fed bans employees from trading stocks and cryptocurrencies after scandals

Fed bans employees from trading stocks and cryptocurrencies after scandals

A statement by the Federal Open Market Committee, the branch of the Fed that determines the direction of monetary policy, set out new rules for “investment and business activity by senior officials.”

The Committee said senior Federal Reserve officials can no longer buy cryptocurrencies, individual stocks or sector funds, or hold investments in individual bonds, agency bonds, commodities or foreign currencies. They also cannot enter into derivative contracts and engage in short selling or buying bonds on margin.

“The rules, which were first announced in October 2021, are intended to support the public’s confidence in the impartiality and integrity of the Committee’s work, protecting even against the appearance of any conflict of interest,” the organization said.

The changes were introduced as a result of increased vigilance over the US central bank: Several senior Fed officials last year made headlines and then resigned after their business activities emerged.

One of them was then Dallas Federal Reserve Chairman Robert Kaplan, who made multiple stock transactions worth more than a million dollars during the pandemic, when the central bank was working to introduce measures to help the economy. Kaplan retired after the scandal

In October, Senator Elizabeth Warren described a “culture of corruption” at the central bank because of apparent “conflicts of interest”.

The rules will take effect on May 1, 2022. Former employees will have 12 months to dispose of stakes in financial assets, while new employees will have six months to adapt to the rules, the statement said.

The new rules will apply to Reserve Bank Board Members and Presidents, Reserve Bank First Vice Presidents, Reserve Bank Research Directors, Committee Staff, Manager and Deputy Manager of the System Open Market Account, division directors of the Board who regularly attend Committee meetings, any other individual designated by the Chair, and the spouses and minor children of such individuals.

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