In order to prevent conflicts of interest in government, the US Office of Government Ethics has released an advisory that says senior officials must disclose NFTs they have. The OGE (Office of Government Ethics) has issued new guidance which expands its existing initiative.
This new guidance raises questions about the U.S government’s stance on viewing NFTs as art or investments.
What are the new rules for Web3?
US politicians are legally obligated to file yearly documents containing personal finance data. This obligation is passed down from the OGE, which has added virtual currencies as one new asset class that needs to be included in these statements.
The new guidance also noted that individuals will need to disclose their ownership of fractionalized NFTs.
If a government official wants to keep more than the OGE’s threshold of NFT, they need to show all of them in their yearly financial statement.
The legal advisory stated that publicly traded companies need to disclose the ownership of collectible NFTs and F-NFTs when they are held for investment or production of income.
However, just because tokens are not securities does not mean that all NFTs should be classified as “utility tokens.
Are NFTs Investment or art?
If a politician holds an NFT worth more than $1,000, they must declare it as part of their set of assets. In addition, any income deemed to be earned by the NFT over $200 is also needed to be declared in the annual report.
The notice also states that government officials will be receiving little wiggle room when determining the nature of an NFT. Ultimately, the advisory concludes it all boils down to a factual assessment. How does the advisory reach this conclusion?
NFTs that are purchased for their aesthetic value and displayed in government officials’ homes, offices, or virtual properties may not need to be reported as art.
“An employee purchases a limited edition of the artist Leandra Garcia’s Paper Moon. Employee is using an NFT digital display frame to display it. Employee is not making any money.”
If an employee ever sells their NFT artwork for more than $200, it’s considered income rather than art.
When disputes arise over the nature of a politician’s purchases, ethics officials should review the transactions recorded by their national food transfer system to make sure they abide by proper laws.
