The U.S. House has moved to tighten ethics rules around lawmakers’ investments — but critics say the new law leaves a big loophole that could let insiders keep profiting. What passed - On July 22, the House approved the Stop Insider Trading Act in a 232–198 vote, sending the bill to the Senate. Wisconsin Republican Rep. Bryan Steil, who introduced the measure in January, urged senators to approve it and send it to President Donald Trump for signature. - The law would bar members of Congress, their spouses and dependent children from buying securities issued by public companies going forward. However, it does not force the sale of existing holdings: lawmakers and relatives may keep current stocks and can sell them under a public-notice regime. How the sale rule works - Owners may sell previously held shares only after filing notice 7–14 days before the planned sale with the clerk of the House or the secretary of the Senate. Steil argues that advance notice deters trades based on confidential information by inviting public scrutiny before execution. Penalties - Violations would trigger a monetary penalty equal to $2,000 or 10% of the covered investment’s value (whichever is higher) plus forfeiture of any trading profits from the prohibited transaction. Congressional ethics committees would enforce these penalties. Loophole fights and the Senate battle - Critics, led by Sen. Elizabeth Warren, say the bill’s allowance for keeping and selling existing stocks fatally weakens it. Warren has said the House language “has MAJOR LOOPHOLES” and argued that lawmakers should be barred from owning, buying or selling individual stocks at all — not just restricted on future purchases. - The dispute highlights two competing approaches: Steil’s targeted ban that regulates future purchases and sales of existing holdings versus broader proposals that would require lawmakers to divest individual stock ownership entirely. The bill’s narrower scope also excludes the president, vice president and their families. Why crypto watchers should care - The House bill is narrower than the ethics language being discussed in the Digital Asset Market CLARITY Act, a sprawling 616-page draft that takes a different tack on digital-asset conflicts. CLARITY’s proposed ethics rules would bar covered officials — including the president, vice president, lawmakers and federal judges — from issuing or sponsoring digital assets through Jan. 20, 2029, and would forbid crypto platforms from listing assets issued or sponsored in breach of that rule. Unlike Steil’s permanent trading limits, CLARITY’s restrictions would expire in 2029. - The differences matter for crypto markets because CLARITY would reach token issuance and platform listing decisions, while Steil’s measure focuses on stock purchases and sales by Congress. Prediction markets: a parallel push - Steil has also proposed the Stop Lawmakers from Predicting Act (introduced June 18), which would bar members of Congress, spouses and dependents from wagering on political outcomes or public-policy questions on prediction platforms such as Kalshi and Polymarket. - Penalties mirror the stock bill: $2,000 or 10% of the prohibited wager’s value (whichever is higher) plus forfeiture of net gains. Steil framed the move as preventing lawmakers from profiting off privileged policy information rather than writing policy. Why prediction markets matter to crypto observers - Public scrutiny of prediction markets has surged after reports of outsized gains tied to politically sensitive contracts — including a reported soldier who allegedly earned more than $400,000 from contracts linked to the removal of Venezuela’s Nicolás Maduro, and a former Trump teleprompter operator said to have made roughly $90,000 on Kalshi contracts tied to wording in presidential speeches. Those cases prompted tighter rules in some states, including Arizona, on government employees using nonpublic information in prediction markets. Where things stand - Steil’s two proposals apply the same principle across different financial products: officials shouldn’t be able to convert privileged government information into private profit. For now, the Stop Insider Trading Act sits with the Senate, where lawmakers including Warren are pushing for stronger, broader restrictions — and the CLARITY Act negotiations continue to shape how digital-asset rules intersect with federal ethics reforms. Expect a contentious Senate debate that will decide whether the House’s narrower approach survives or gives way to tougher divestment-style rules. Read more AI-generated news on: undefined/news