Crypto crashes Capitol Hill’s stock ban talks
The rise of cryptocurrency is triggering a new fight in Congress.
At issue in the conflict is whether bipartisan legislation to restrict lawmakers’ stock trading should also apply to digital assets.
The question is dividing Reps. Abigail Spanberger, a Virginia Democrat, and Chip Roy, a Texas Republican, who are spearheading the stock ban proposal. Their bill would force lawmakers to place individual stocks they own into blind trusts, in a bid to curtail the temptation for members to trade based on privileged information.
Spanberger and ethics watchdogs, as well as one key drafter of a previous stock trading crackdown, say the bill should treat crypto assets the same as stocks. But Roy is pushing back.
“It's a little different,” Roy said in an interview. “Because allowing people to hedge against the dollar that's getting destroyed on a regular basis, I'm not sure if I want to completely preclude people's ability to do that.”
The emerging spat is the latest test of the crypto market’s pull in Washington. While just a handful of lawmakers have disclosed owning digital assets in the last few years, the crypto industry just notched a series of big, bipartisan legislative victories and is gearing up to spend more than $160 million on the 2024 elections. Crypto’s influence is particularly strong on the right, with former President Donald Trump pledging to give the industry a boost if he’s reelected.
Spanberger said in a statement that crypto and stocks are similar because they can both be highly speculative and influenced by the words and actions of lawmakers.
“We must enact legislation that eliminates even the potential conflict of interest that lawmakers could have if their votes affect their financial portfolios — whether that be through individually held stocks or cryptocurrency,” said Spanberger, who has never traded crypto according to an aide.
Sen. Jon Ossoff, the Georgia Democrat who introduced a similar bill last year alongside Arizona Democratic Sen. Mark Kelly, echoed Spanberger.
“I don’t think members of Congress should be trading crypto while making policy about crypto," Ossoff said in a statement.
For Ty Gellasch, a former Democratic Senate aide who helped write 2012 restrictions on congressional insider trading, it’s a timely debate to have as Congress ramps up work on setting up a new regulatory framework for crypto. Last month in the House, 208 Republicans and 71 Democrats passed landmark, industry-backed legislation that would revamp how regulators police the market. Spanberger and Roy supported the bill, which would extend existing congressional trading restrictions to digital assets.
“Crypto assets are financial assets, and they should be treated the same as others,” said Gellasch, who now leads the Healthy Markets Association. “The conflicts of interest are particularly acute for crypto right now, given that Congress isn't talking about rewriting a whole new rule book for stocks. They are for crypto.”
The crypto conundrum comes as Spanberger and Roy consider easing some of the bill’s other requirements to shore up support in the face of huge political hurdles. Roy said he supports reworking it to let lawmakers sell assets “with transparency.”
Sen. Cynthia Lummis, one of the Hill’s most active crypto legislators, said she put her digital asset holdings into a blind trust but doesn’t think lawmakers should be forced to do so. The Wyoming Republican said in an interview it would end up “hurting people of ordinary means.”
“The reason that we did it, that I put mine in a blind trust, is I'm so outspoken on this subject,” she said.
