Although most stock and cryptocurrency investments made by members of Congress must already be disclosed, several have noted possible conflicts of interest.
Why ban stock trading?
The 118th Congress may take up this issue after a change in leadership. At one point, many US legislators from both parties supported legislation forbidding members from investing in stocks or cryptocurrency.
Members of Congress should not own or trade individual stocks. And neither should their spouses.
— Elizabeth Warren (@SenWarren) January 2, 2023
Following the 2022 Midterm elections, Republicans will assume control of the House of Representatives with a narrow majority beginning on Jan. 3, when the new session of the United States Congress convenes. Democrats will continue to have a majority in the Senate. Republican lawmaker Kevin McCarthy, a candidate for the position of speaker of the House, allegedly stated in January 2022 (1) that, should his party take control of the house, he would seek an absolute prohibition on legislators owning and trading stocks. This provision would likely apply to cryptocurrency. As of the time of publishing, it is unknown if McCarthy has the support needed to take over as Speaker of the House, which is expected to happen on January 3.
The conflict of interests
The fact that elected politicians are permitted to trade and keep particular assets while in office, however, has been cited by many as posing a conflict of interest. The Stop Trading on Congressional Knowledge Act, or STOCK Act, originally enacted in 2012, alleges that 77 members of Congress broke the disclosure rules during the 117th Congress (2). Delayed reporting of permissible trades was one of these breaches, although members were nonetheless allowed to make decisions about laws that could have been affected by their investments.
Kevin McCarthy promised if Republicans took over the House, he would act on a stock trading ban. But he’s gone silent.
A group of 5 House Rs say they can’t support McCarthy because he’s not trustworthy.
McCarthy’s Speaker bid is in peril. House members will vote next Tues. pic.twitter.com/dMOrOyeD7I
— More Perfect Union (@MorePerfectUS) December 28, 2022
Pro-crypto, for instance, Senator Cynthia Lummis, who chairs hearings on the Commodity Futures Trading Commission for the Senate Agriculture Committee, has acknowledged stakes in Bitcoin, which the financial regulator has classified as a commodity. Additionally, prior reports of ether purchases were made by Senator Pat Toomey, ranking member of the Senate Banking Committee. Major disputes in the cryptocurrency market in 2022 were largely centered on the financial connections between American legislators and business executives. FTX executives, including former CEO Sam Bankman-Fried, donated to political campaigns and candidates for Republicans and Democrats.
As a result, many in the sector questioned the lawmakers’ integrity during hearings intended to look into the crypto exchange failure. Alexandria Ocasio-Cortez claims that US lawmakers should not own cryptocurrency to be ‘impartial.’ The STOCK Act should be amended to forbid members of Congress, 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,” according to Zoe Lofgren, chair of the Committee on House Administration. In 2022, the proposed policy change remained unaltered, but the Federal Open Market Committee passed identical regulations prohibiting senior Federal Reserve officials from owning and acquiring cryptocurrencies.
