The US federal agency issues legal advice on NFTs

by James · July 20, 2022

Director Emory Rounds III mentioned that all NFT investments worth $1,000 must be disclosed as long as they are “held for investment or production of income” during the reporting period.
In addition, officials who earn more than $200 in the reporting period from their NFT investments are also required to declare their assets according to the federal agency.

The United States Office of Government Ethics (OGE) has in a written statement advised senior government officials on the legal ways to handle their investments in Non Fungible Tokens (NFTs). According to the legal advice presented to the agency’s designated ethics officers, public officials must disclose their investments. Director Emory Rounds III mentioned that all NFT investments worth $1,000 must be disclosed as long as they are “held for investment or production of income” during the reporting period. This applies to both fractionalized (F-NFT) and collectibles.

In addition, officials who earn more than $200 in the reporting period from their NFT investments are also required to declare their assets according to the federal agency.

Public financial disclosure filers must also disclose purchases, sales and exchanges of collectibles and F-NFTs that qualify as securities.

Previously, OGE declared in a ruling that personal belongings such as clothing, family photos and electronics should not be reported. The same ruling also applies to their NFT representations. However, the advice is aimed at reporting NFT investments that represent properties as real estate.

Investors must enter the amount for all eligible NFTs

The report also mentions that filers may be required to disclose collectibles as financial assets depending on their circumstances. To help filers determine their reporting requirements, Director Rounds listed seven questions to help them. They have also been asked to use OGE Form 278e for this process. For investors, they are required to provide the value, income type and amount of all eligible NFTs in their listings. With the evolving nature of the crypto market, OGE has assured that they will continuously monitor the industry and make changes in the future if necessary.

The crypto industry in the United States has been in the news recently as the US Securities and Exchange Commission’s (SEC) regulation of the sector has attracted criticism. Congressman Brad Sherman recently urged them to pursue anti-exchange cases with courage. According to him, the “big fish” exchanges like Binance and Coinbase are usually left out.

The big fish running the big exchanges made many, many tens of thousands of transactions with XRP. You know it’s security – it means they illegally operated a stock exchange. They know it’s illegal because they stopped doing it, even though it was profitable. […] I hope you focus on that.

In his statement, Sherman questioned why the crypto exchanges are not being investigated if Ripple executives have been taken to court for offering unregistered securities (XRP).

SEC Enforcement Director Gurbir Grewal stated in response that the commission was investigating Poloniex in 2021 for trading cryptocurrencies that are considered securities for investors in the United States.