US Federal Agency Issues Legal Notice on NFT Investments

The notice primarily targets reports on NFT investments that represent "properties", such as real estate.

The United States Office of Government Ethics (OGE) has issued a legal opinion recommending various instances where senior government officials are required to disclose their investments in non-fungible tokens (NFTs).

In the legal opinion presented to the designated agency's ethics officers, Director Emory Rounds III said that all NFT investments - both fractional (F-NFT) and collectibles - of $1,000 must be reported if "held for investment or income-producing purposes" at the end of the reporting period.

The guidelines provided by the federal agency also require the reporting of NFT investments if officials made profits over $200 during the reporting period, adding that:

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

The notice primarily targets the reporting of NFT investments that represent "property", such as real estate. However, the EMB has previously ruled that personal property, including clothing, electronic devices or family photos – or NFTs depicting the same – are not reportable.

Depending on the circumstances disclosed by each registrant, collectibles may or may not be required to disclose as financial investments. The series asked seven questions to help filers self-determine their reporting requirements, as listed below.

Factors to Consider for Financial Disclosure. Source: oge.gov

Reporters were instructed to use Form OGE 278e to report NFT investments, in which investors must include details such as value, type of income and amount of revenue from all qualifying NFTs. The EMB revealed that it will continue to monitor the progress of crypto and modify the above guidelines as necessary in the future.

Related: