Congressman Torres introduces legislation to prohibit federal officials from trading or owning cryptocurrency.

Representative Ritchie Torres is in the process of drafting a new piece of legislation aimed at banning federal officials from owning or trading cryptocurrencies while serving in their positions.

This proposed law intends to eliminate potential conflicts of interest and broaden the current financial ethics guidelines to encompass digital currencies. It would affect a broad spectrum of public officials, which includes members of Congress, high-ranking executive branch leaders, and federal regulators.

The initiative extends current prohibitions on insider trading and specific private investments by public officials, applying similar limitations to cryptocurrency investments, particularly stablecoins and memecoins.

The circulating draft indicates that the legislation is designed to prevent federal officials from financially benefiting from digital asset markets that they might influence through their roles in legislation, regulation, or enforcement.

Additionally, the proposal calls for compulsory disclosure of all digital asset holdings from the officials covered by the legislation.

Titled the “Stop Presidential Profiteering from Digital Assets Act,” the legislation seems to specifically target President Donald Trump and his family’s involvement in the cryptocurrency market, including the decentralized finance initiative known as World Liberty Financial and its stablecoin, USD1, alongside the TRUMP memecoin.

The legislation emerges against the backdrop of ongoing regulatory activities in the cryptocurrency industry while Congress deliberates on the classification, regulation, and governance of digital assets.

Justin Slaughter, who serves as the vice president of regulatory affairs at Paradigm, remarked that the bill could have gained approval last year if Congress had proceeded with the “McHenry-Waters package.”

This package refers to bipartisan initiatives proposed by former Chairman Patrick McHenry and Ranking Member Maxine Waters of the House Financial Services Committee, which focused on the effects of artificial intelligence (AI) on financial and housing sectors.

Slaughter commented:
“Good bill. We could’ve passed this Torres bill last year too, if we’d passed McHenry Waters. Would’ve been easy before the election. Let this serve as a reminder that failing to pass legislation doesn’t mean it becomes more effective over time.”

Ryan Selkis, co-founder of Messari, expressed doubts regarding the bill’s chances of passing.

In his response to Slaughter, Selkis noted:
“Might as well call it the ‘Screw Trump and His Kids’ act as it’s not going to happen.”

He also criticized recent legislative efforts targeting memecoins and stablecoins as components of wider regulatory frameworks.

Acknowledging the evolving political landscape, Slaughter agreed that the bill’s passage is now “impossible” and that it may end up serving as a “cautionary tale.”

This draft legislation does not seem to be included in any broader regulatory framework and could be introduced as an independent initiative.

Although Torres has yet to formally submit the legislation, public discourse surrounding its details has reignited worries about policymakers’ interactions with cryptocurrency markets.

This year, Democratic lawmakers have urged the US Securities and Exchange Commission (SEC) to provide records on World Liberty Financial while also calling on the Treasury to resist the notion of creating a federal strategic reserve of Bitcoin.

Current financial disclosure standards for public officials do not specifically address the unique traits or traceability of blockchain assets, a gap that the Torres bill aims to tackle directly by prohibiting profit-making in crypto.