A cryptocurrency mining computer is seen in front of a bitcoin logo during the annual Computex computer exhibition in Taipei, Taiwan, on June 5. (Tyrone Siu/Reuters)

Virtual money is real enough that federal employees must report it on their financial disclosure statements and is covered by conflict of interest laws, the government’s central ethics agency said Monday.

The Office of Government Ethics said guidance was needed because “virtual currencies are experiencing a surge in use and access, and as a result, employees who hold virtual currencies are increasingly seeking guidance from their ethics officials concerning their financial disclosure reporting obligations.”

While virtual currency does not have the status of legal tender, the Internal Revenue Service considers it “property” for federal tax purposes and other federal agencies recognize it as an investment vehicle, the guidance said, making it subject to financial disclosure and conflict of interest laws applying to assets such as stocks and bonds.

Those principles “apply equally to other digital assets, such as ‘coins’ or ‘tokens’ received in connection with initial coin offerings or issued or distributed using distributed ledger or blockchain technology,” it said.

Many federal employees, mainly with responsibilities over the spending of money, must file annual financial disclosure forms, which their employing agencies review for potential conflicts of interest but keep confidential. A smaller number, mainly at more senior levels, must file more detailed forms, which are publicly available.

While the rules are complex, in general filers must report their holdings in a virtual currency “if the value of the virtual currency holding exceeded $1,000 at the end of the reporting period or if the income produced by the virtual currency holding exceeded $200 during the reporting period. Filers are required to identify the name of the virtual currency and, if held through an exchange or platform, the exchange or platform on which it is held,” the guidance said.

Those who file publicly available disclosures further must report certain purchases and sales of stocks and other forms of securities. However, the guidance said those requirements will vary depending on whether a particular holding is considered a “security.” If there is a question, “we recommend ethics officials advise the employee to report transactions of that asset on periodic transaction reports if the value of the transaction exceeds the reporting threshold.”

In addition to triggering reporting requirements, virtual money “is an investment asset and, like other property held for investment, it may create a conflict of interest for employees who own it” and does not fall under any of the exceptions to conflict of interest law, it said.

“Agency ethics officials should therefore analyze whether their employees’ official duties would have an effect on the value of their virtual currency, just as they would any other property held for investment or the production of income. They should also alert their employees to the potential conflict of interest risk posed by ownership of virtual currency,” the OGE said.

The agency added it may issue further guidance “as the nature of virtual currency becomes better defined.”