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Lawmakers on both sides in the U.S. House of Representatives have supported a bill that would ban members of Congress, their spouses and dependents from trading or owning certain financial instruments, which could extend to investments in digital assets.
In a May 2 statement, Democratic Representatives Alexandria Ocasio-Cortez (AOC) and Raja Krishnamurthy and Republican Party Representatives Brian Fitzpatrick and Matt Goetz introduced a bipartisan bill to restore faith in the government. The April 28 draft bill proposed amending US laws applicable to members of Congress to prohibit the ownership of securities, securities futures and commodities, and to restrict the ownership or trading of certain assets.
Under the bill, members of Congress investing in such assets would basically be required to sell them or place them in a blind trust within 90 days of passing. Failure to comply with the law can result in civil charges by the US Attorney General, which can result in a fine of up to $50,000.
“The ability to individually trade stocks undermines public confidence in the government,” AOC said. “When participants have access to classified information, we should not trade it on the stock market. It’s really that simple”.
Being a Bipartisan Problem Solver is about building bridges, even between people where it would seem impossible. It’s what we do. And it’s what America needs.
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— Rep. Brian Fitzpatrick (@RepBrianFitz) May 3, 2023
While four members of Congress cited stock trading as one of the reasons for the bill, the text suggested that holding certain cryptocurrencies could also be included in the ban. Members of the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission have stated that Bitcoin (BTC) qualifies as a commodity, while some are still unclear about the asset status of Ether (ETH).
In 2021, AOC said it personally avoided investments that could potentially constitute a conflict of interest, a policy it has applied to equities and cryptocurrencies. Under the Congressional Stop Trading in Knowledge Act, or STOCK Act, US legislators are largely required to report investments, but they are allowed to control or propose legislation on matters potentially related to companies in which they own shares.
Many experts suggested that the penalties for lawmakers who fail to disclose investment information under current regulations were not a sufficient deterrent to potential conflicts of interest. Florida spokeswoman Lois Frankel reportedly sold her shares in troubled First Republic Bank and purchased a portion for JPMorgan ahead of the sale, suggesting insider information was used to profit.
On the subject: US congressmen rebuke presidential advisers for cryptocurrency position in economic report
Politicians have previously unsuccessfully proposed ways to expand the scope of the SHARES Act to outright prohibit certain investments. Many members of the American public believe that the practice of allowing members to own shares or accept financial contributions on behalf of companies is ethically dubious. For example, some executives at defunct cryptocurrency exchange FTX, including former CEO Sam Bankman-Fried, have donated to both Republican and Democratic campaigns.
It’s unclear whether the bipartisan bill will garner enough votes to pass the House and Senate before it hits President Joe Biden’s desk to sign into law.
