Federal Reserve Bans Employees from Trading, Cryptocurrencies

Federal Reserve officials will not be able to trade a large number of assets including stocks and bonds - as well as cryptocurrencies - under the new rules that became official on Friday.

Following up on regulations announced in October, the Federal Open Market Committee (FOMC) has announced that most restrictions will take effect on May 1.

The rules will cover FOMC members, regional bank heads and a host of other officials including staff officers, directors of bond offices and Federal Reserve employees who regularly attend board meetings. It also extends to spouses and minor children.

In the future, officials covered by the new rules must provide 45 days' notice before making any permitted asset purchases, a restriction that will take effect on July 1. They will then have to hold these positions for at least a year and will be banned from any trading during “periods of increased financial market stress.” There is no specific definition of the term, which will be determined by the Chairman of the Federal Reserve and the General Counsel of the Board of Directors.

Besides stocks, bonds and cryptocurrencies, the ban extends to commodities, forex, sectoral index funds, derivatives, short positions, agency securities or the use of margin debt to purchase assets.