Framework to ban members of Congress and SCOTUS from trading stocks includes crypto provision

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Mem­bers of the Unit­ed States House of Rep­re­sen­ta­tives and Sen­ate as well as Supreme Court jus­tices cur­rent­ly trad­ing cryp­tocur­ren­cies may have to stop HODLing while in office should a bill get enough votes.

Accord­ing to a frame­work released on Thurs­day, chair Zoe Lof­gren of the Com­mit­tee on House Admin­is­tra­tion — respon­si­ble for the day-to-day oper­a­tions of the House — said she had a “mean­ing­ful and effec­tive plan to com­bat finan­cial con­flicts of inter­est” in the U.S. Con­gress by restrict­ing the finan­cial activ­i­ties of law­mak­ers and SCOTUS jus­tices, as well as those of their spous­es and chil­dren. The bill, if passed accord­ing to the frame­work, would sug­gest a change in pol­i­cy fol­low­ing the 2012 pas­sage of the Stop Trad­ing on Con­gres­sion­al Knowl­edge Act, or STOCK Act, allow­ing mem­bers of Con­gress to buy, sell and trade stocks and oth­er invest­ments while in office, but also requir­ing them to dis­close such transactions.

“Con­gress can act to restore the pub­lic’s faith and trust in their pub­lic offi­cials and ensure that these offi­cials act in the pub­lic inter­est, not their pri­vate finan­cial inter­est, by restrict­ing senior gov­ern­ment offi­cials — includ­ing Mem­bers of Con­gress and the Supreme Court — and their spous­es and depen­dent chil­dren from trad­ing stock or hold­ing invest­ments in secu­ri­ties, com­modi­ties, futures, cryp­tocur­ren­cy, and oth­er sim­i­lar invest­ments and from short­ing stocks,” said Lofgren.

She added:

“I will soon intro­duce leg­isla­tive text for a bill built on this frame­work for reform. Many Mem­bers have already con­clud­ed that reforms are necessary.”

The frame­work sug­gest­ed that law­mak­ers and SCOTUS jus­tices could still hold and dis­close a port­fo­lio with diver­si­fied mutu­al funds, exchange-trad­ed funds, Trea­sury bills, and oth­er invest­ments that did “not present the same poten­tial for con­flicts of inter­est.” The bill’s frame­work also pro­posed dis­clo­sure amounts be more pre­cise rather than the “extreme­ly broad” range cur­rent­ly used — for exam­ple, fro$5 mil­lion to $25 mil­lion — and be avail­able to the public.

Under the STOCK Act, law­mak­ers are required to report the pur­chase, sale or exchange of any invest­ment over $1,000 with­in 30 to 45 days but the law pro­vides min­i­mal finan­cial and legal con­se­quences for not fil­ing in time — some­times as lit­tle as a $200 late fee. The pro­posed frame­work sug­gest­ed enforc­ing fines of $1,000 for every 30-day peri­od an indi­vid­ual was in vio­la­tion of dis­clo­sure rules, increas­ing the late fee to $500, and autho­riz­ing the Depart­ment of Jus­tice to bring civ­il actions if nec­es­sary. The House Press Gallery’s Twit­ter account report­ed on Thurs­day that the House could con­sid­er the pro­posed leg­is­la­tion as ear­ly as next week.

Sen­a­tors Jon Ossoff and Mark Kel­ly pro­posed sim­i­lar reforms for the STOCK Act in the Sen­ate in Jan­u­ary, but there has been no move­ment on the bill in more than 8 months. Accord­ing to Lof­gren, House Speak­er Nan­cy Pelosi tasked the com­mit­tee to review poten­tial finan­cial con­flicts of inter­est in Con­gress. How­ev­er, the speak­er pre­vi­ous­ly pushed back against efforts to pro­hib­it law­mak­ers from own­ing or trad­ing stocks, say­ing “they should be able to par­tic­i­pate in that.”

Relat­ed: Pow­ers On… Why US offi­cials ignore ethics and STOCK Act by trad­ing stocks?

A num­ber of House mem­bers and sen­a­tors have dis­closed their expo­sure to cryp­to invest­ments, includ­ing Illi­nois Rep­re­sen­ta­tive Marie New­man, Flori­da Rep­re­sen­ta­tive Michael Waltz, Wyoming Sen­a­tor Cyn­thia Lum­mis, Texas Rep­re­sen­ta­tive Michael McCaul, Penn­syl­va­nia Rep­re­sen­ta­tive Pat Toomey, Alaba­ma Rep­re­sen­ta­tive Bar­ry Moore, and New Jer­sey Rep­re­sen­ta­tive Jef­fer­son Van Drew. In Decem­ber 2021, New York Rep­re­sen­ta­tive Alexan­dria Oca­sio-Cortez said it inap­pro­pri­ate for her to hold Bit­coin (BTC) or oth­er dig­i­tal assets because U.S. law­mak­ers have access to “sen­si­tive infor­ma­tion and upcom­ing policy.”

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