TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, June 21, 2018

Why The Treasury Department's Top Lawyer Sold Off His Bitcoin Holdings

Treasury Department (2018), Why the Treasury Department's Top Lawyer Sold Off His Bitcoin Holdings:

The U.S. Treasury Department’s top lawyer sold off up to $30,000 worth of bitcoin in December, a month after Secretary Steven Mnuchin said the department was looking “very carefully” into illegal uses of the cryptocurrency, according to financial disclosures.

Brent McIntosh, a former Sullivan & Cromwell partner who was confirmed as Treasury’s general counsel in August, reported two sales of bitcoin in December, valuing each at between $1,000 and $15,000, according to disclosures released by the U.S. Office of Government Ethics. The sales came at the end of a year that saw bitcoin’s value skyrocket from about $1,000 to a high of nearly $20,000.

A Treasury Department spokeswoman said Tuesday that McIntosh sold his bitcoin to avoid potential ethics conflicts after being asked in late November to participate in a review of digital currencies. Ethics officials advised McIntosh that his continued ownership of bitcoin could raise recusal issues in certain instances, the spokeswoman said.

McIntosh had previously reported on his financial disclosure having bitcoin holdings worth between $1,000 and $15,000. McIntosh also revealed that he received nearly $2.9 million in 2016 income from Sullivan & Cromwell, where he was co-leader of the firm’s cybersecurity practice. McIntosh purchased bitcoin to better understand the digital currency in connection to his law practice, the Treasury Department spokeswoman said.

Just as financial regulators have responded to the rising popularity of digital currencies, U.S. government ethics officials have increasingly confronted questions about the disclosure obligations of federal employees who have entered the cryptocurrency market.

On Monday, the U.S. Office of Government Ethics issued a legal advisory telling executive branch officials that they must report their holdings in virtual currency as part of the public financial disclosure process. The ethics office said employees are required not only to name the virtual currency they hold but also identify the exchange or platform they use. “Virtual currency is an investment asset and, like other property held for investment, it may create a conflict of interest for employees who own it,” the advisory said.

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