US legislators forbid investing in “financial instruments”

In the United States House of Representatives, lawmakers from both parties have supported a bill prohibiting members of Congress, their spouses, and dependents from trading or owning certain financial instruments, which could include investments in digital assets.

The Bipartisan Restoring Faith in Government Act was introduced on May 2 by Democratic Representatives Alexandria Ocasio-Cortez (AOC) and Raja Krishnamoorthi, as well as Republican Representatives Brian Fitzpatrick and Matt Gaetz.

A draft of the bill dated April 28 proposed amending U.S. laws applicable to members of Congress to prohibit ownership of securities, securities futures, and commodities and to limit ownership or trading of certain assets.

Within 90 days of the bill’s passage, congressional members who own such assets would be required to sell them or place them in a blind trust.

Failure to comply with the law may result in civil proceedings from the United States Attorney General and fines of up to $50,000.

“The ability to trade stocks individually erodes public confidence in government,” stated AOC. “When members have access to classified information, we should not use it to speculate on the stock market.” It’s truly that easy.”

Even though the four members of Congress cited stock trading as one of the justifications for the bill, the text of the legislation implied that ownership of certain cryptocurrencies could also be prohibited.

Members of the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission have stated that Bitcoin is a commodity, whereas the asset status of Ether remains ambiguous to some.

AOC stated in 2021 that she avoided investments that could potentially create a conflict of interest, a policy she applied to both equities and cryptocurrencies.

Under the Stop Trading on Congressional Knowledge Act, or STOCK Act, U.S. legislators are generally required to disclose investments but are still permitted to supervise or propose legislation on matters potentially related to companies in which they own stock.

According to numerous experts, the current penalties for legislators who fail to disclose their investments are insufficient to deter potential conflicts of interest.

Rep. Lois Frankel reportedly sold her stock in the troubled First Republic Bank and bought some for JPMorgan before the sale, indicating the use of inside information for financial gain.

Without success, policymakers have previously proposed expanding the scope of the STOCK Act to prohibit certain investments explicitly.

Many members of the American public have suggested that permitting members to own stock or receive financial contributions on behalf of companies is unethical.

Some executives at the defunct cryptocurrency exchange FTX, including former CEO Sam Bankman-Fried, contributed to the campaigns of both Republican and Democratic legislators.

It is uncertain whether the measure will receive enough votes to pass both the House and Senate before reaching President Joe Biden’s desk for signature.