The US Ethics Body Issues Rules For Employees Owning NFTs
- The Office of Government Ethics released guidance for public financial disclosure filers who own non-fungible tokens
- The assets that are held “solely for personal, family, or household use are not held for investment or production of income”
The United States executive branch employees who own NFTs will now be required to disclose assets they hold for the investment of income and are worth more than $1,000 at the end of the reporting period or produce over $200 in investment income during the reporting period.
As per the new legal advisory released by the Office of Government Ethics Director, Emory A. Rounds III, NFT holders who work at the office must disclose their asset holdings for ethical reasons.
“Public financial disclosure filers must report the purchase, sale, or exchange of collectible NFTs or F-NFTs that are securities when the value of the transaction is over $1,000.”It states.
The office is in charge of managing more than 130 government agencies’ and the White House’s executive branch employees. The recommendation for staff members who submit public financial disclosures follows the peak of the NFT market at the beginning of 2022.
Notably, the new advisory focuses on NFTs and fractional NFTs in the form of “virtual artwork, music, video files, trading cards, digital real estate or items in a virtual world.”
The document clarifies that the assets that are held “solely for personal, family, or household use are not held for investment or production of income.” Other domestic items, including furniture, clothing, and perishables bought for family use, are not reportable, according to earlier statements from the office.
Moreover, as per the new rules, filers must report NFTs even if they are not “held for investment or the production of income,” and they actually produced over $200 in investment income in the reporting period. This means if an employee buys an NFT for display but later sells it for more than $200, they would be required to report the NFT as a source of income.
In the advisory, the office outlined a seven-part test for accessing whether an NFT is retained for personal use or investment purposes. For instance, the test asks if the NFT was bought largely for its potential value or for personal or aesthetic reasons.
Interestingly, in July, the United States Office of Government Ethics decided to ban employees investing in crypto to work on crypto-related regulations and policies.