The United States Office of Government Ethics issued a legal advisor recommending that senior government officials disclose their investments in nonfungible tokens (NFT) in various circumstances.
In the legal advisory presented to the designated agency ethics officials, director Emory Rounds III said that all NFT investments — both fractionalized (F-NFTs) and collectibles — worth $1,000 must be reported if “held for investment or production of income” at the end of the reporting period.
Federal agency guidance also requires that NFT investments be reported if there are profits exceeding $200.
“Public financial disclosure filers must also disclose purchases, sales, and exchanges of collectible NFTs and F-NFTs that qualify as securities.”
The advisory primarily targets reporting of NFTs investments that represent “property,” such as real estate. However, the OGE previously ruled that personal assets, including clothing, electronics or family photos — or NFTs representing the same — are not reportable.
Collectibles can or may not be required to report as financial investments depending on the circumstances of each filer. Rounds asked seven questions that help filers determine their reporting obligation.
For reporting NFT investments, filers were advised to use OGE Form 278e. Investors must include details such income type, value and amount. The OGE will continue to monitor crypto developments and may modify the guidance as necessary.
Related: US lawmaker condemns SEC enforcement chief for failing to go after crypto exchanges with ‘big fish.
Congressman Brad Sherman advised the Securities and Exchange Commission (SEC) to pursue securities cases against cryptocurrency exchanges with “fortitude and courage.”
Highlighting SEC’s attempt to investigate crypto exchanges, enforcement director Gurbir Grewal referred to a case brought against Poloniex in August 2021. Sherman however pointed out that investigations should be pursued against larger exchanges, such as Binance or Coinbase.
“The big fish operating the major exchanges did many, many tens of thousands of transactions with XRP. You know it’s a security — that means they were illegally operating a securities exchange. They know it’s illegal because they stopped doing it, even though it was profitable. […] I hope you focus on that.”
In tune with Sherman’s request for stricter monitoring of crypto exchanges, both SEC chair Gary Gensler and Grewal cited concerns about cryptocurrency enforcement in the government department’s budget request for the 2023 fiscal year.