All members of Congress are already required to report most stock and cryptocurrency investments, but many have raised concerns about potential conflicts of interest.
Many US lawmakers on both sides of the aisle have expressed support for legislation prohibiting members from investing in stocks or cryptocurrencies — an initiative that the 118th Congress could address if leadership changes.
Following the 2022 midterm elections, Republicans will take control of the House of Representatives with a slim majority beginning on Jan. 3, while Democrats will maintain a Senate majority. Kevin McCarthy, a Republican candidate for House Speaker, reportedly stated in January 2022 that if his party wins control of the chamber, he would consider an outright ban on lawmakers holding and trading stocks — a measure that presumably could extend to crypto.
At the time of publication, it was unclear whether McCarthy had the votes to take over as House leader, a process that will most likely begin on January 3. Many have, however, cited the ability of elected officials to trade and hold certain assets while in office as a potential conflict of interest.
During the 117th Congress, 77 lawmakers allegedly violated the disclosure requirements of the Stop Trading on Congressional Knowledge Act, or STOCK Act, which was first passed in 2012. Members were still allowed to handle legislation on matters that could have been influenced by their own investments, despite violations such as delayed reporting of allowable trades.
Senator Cynthia Lummis, who chairs the Senate Agriculture Committee and oversees hearings on the Commodity Futures Trading Commission, has disclosed investments in Bitcoin, which has been designated as a commodity by the financial regulator. Senator Pat Toomey, ranking member of the Senate Banking Committee, has previously reported purchases of Ether and Bitcoin Cash (BTC), but he will be retiring in 2023.
In 2022, financial ties between US lawmakers and industry leaders were at the centre of major controversies in the crypto space. Executives at crypto exchange FTX, including former CEO Sam Bankman-Fried, donated to politicians and campaigns for both Republicans and Democrats, prompting many in the industry to question lawmakers’ objectivity during hearings into the firm’s demise.
In September, Zoe Lofgren, chair of the House Committee on Administration, introduced legislation to amend the STOCK Act to prohibit members of Congress and the Supreme Court, as well as their spouses and dependent children, from “trading stock or holding investments in securities, commodities, futures, cryptocurrency, and other similar investments.” Although there was no movement on the proposed policy change in 2022, the Federal Open Market Committee approved similar rules prohibiting senior Federal Reserve officials from purchasing and holding cryptocurrency.