One of the oldest investment management organizations in the world, Capital Group, has prohibited its associates and family members from investing in cryptocurrencies. According to the upgraded Code of Ethics registered in the Securities and Exchange Commission (SEC) on April 19, they will also not be able to participate in any Initial Coin Offerings or ICOs.
The update in the Code of Ethics stresses attention over the new policies and guidelines towards ICOs and Initial Public Offerings IPOs. It states, “All associates and immediate family members residing in the same household may not participate in IPOs or ICOs.”
As per the document, Capital Group will have the power to acknowledge a rare exception for IPOs which will be reckoned as “on a case-by-case basis.” However, the document does not inform about any exceptional case for ICOs as its prohibition “applies to all Capital associates.” On the other hand, the updated code of ethics has not clarified whether investments made on behalf of clients are also banned.
Earlier this March, SEC announced that it would be examining around 100 hedge funds that are related to digital currencies. The main reason for the investigation is to advise the SEC over their policies and its impact on virtual currencies. Currently, the examiners are matching the assets purchased by fund managers with those advertised to investors in offering statements.
A partner at Schulte Roth & Zabel LLP, a firm involved in providing advice for the hedge fund, Marc Elovitz, said, “This is a way for the SEC overall to gather information and learn about important new technology and products.” These operations are conducted “to educate the commission overall about new businesses or new industries.”
The South Korean government has disallowed its employees to hold and trade in digital currencies since last month. It said that government officials indulged in the trading of digital currencies are “in violation of the prohibition of forbearance obligations under the civil servants’ law” and are liable to disciplinary actions.
The Ministry of Personnel Management issued a document named, “Virtual currency holdings and transaction-related information for civil servants.”
In similar news, Justin Schmidt was appointed as the head of digital asset markets by Goldman Sachs Group Inc. to help clients gain exposure to cryptocurrencies. Galvin-Cohen, spokesperson Goldman Sachs said, “In response to client interest in various digital products, we are exploring how best to serve them in the space. We have not reached a conclusion on the scope of our digital asset offering.”
As of now, the reason to ban associates from using cryptocurrencies is still unclear. Being one of the largest financial service providers in the world, Goldman Sachs decision will have a great impact on other institutions. According to experts Goldman Sachs is trying to comply with the regulations launched by SEC in the US. Crypto users have always been under government radar, and Goldman Sachs is trying to stay away from any situation that harms its goodwill. It would be interesting to see if other financial services follow its footprints or not.