US House Passes Congressional Stock Trading Ban Amid Senate Opposition Over Loophole Concerns

The US House of Representatives has approved a congressional stock-trading ban in a 232-198 vote, forwarding the measure to the Senate despite criticism that existing holdings would remain untouched. The vote marks one of the furthest advances for a congressional trading restriction since the 2012 STOCK Act, which explicitly prohibited lawmakers and federal employees from trading on non-public information obtained through official duties and mandated periodic public disclosure of securities transactions.

According to a statement from Representative Bryan Steil's office, the House passed the Stop Insider Trading Act on Wednesday, July 22. Steil, a Wisconsin Republican who chairs the House Administration Committee, introduced the legislation in January and has urged senators to advance it to President Donald Trump for signature.

Scope of the Stop Insider Trading Act

Under the bill, members of Congress, their spouses, and dependent children would be prohibited from purchasing securities issued by publicly traded companies. The restriction applies only to new acquisitions — lawmakers and their relatives would be permitted to retain stocks already held in their portfolios.

Existing shares could still be sold, provided the owner files a public notice in advance. The legislation requires notice between seven and fourteen days before a planned sale, with filings submitted to the clerk of the House or the secretary of the Senate. This pre-sale notice would tighten the STOCK Act's existing disclosure framework, which currently requires transaction reports to be filed within 30 to 45 days after a trade is executed.

Steil framed the proposal as a mechanism to prevent lawmakers from leveraging non-public information obtained through their official duties for personal financial benefit. Following the bill's passage, he described it as "a major step forward for ethics reform on Capitol Hill."

Penalties under the bill combine a financial charge with mandatory disgorgement of trading profits. Congressional ethics committees would levy either $2,000 or 10% of the covered investment's value, whichever is greater. Violators would also be required to surrender any profit derived from a prohibited transaction.

During House floor debate, Steil noted that lawmakers had not previously been given a comparable opportunity to vote on the issue. The bill drew bipartisan support, though the 232 affirmative votes represented a relatively narrow margin within the chamber.

Senate Opposition and the Loophole Debate

Upon receiving the legislation on Thursday, the Senate emerged as the next hurdle. Senator Elizabeth Warren, a Massachusetts Democrat who has long advocated stricter constraints on congressional trading, rejected the House version on the grounds that it would permit officials to continue holding and selling stocks they already own. Multiple proposals to restrict or ban congressional stock trading have been introduced across recent Congresses, but none has previously cleared both chambers.

"The bill has major loopholes," Warren wrote on Thursday, adding that the current version was "not gonna fly in the Senate." She contended that members of Congress should be barred from owning, buying, or selling individual stocks, rather than facing restrictions limited primarily to future purchases.

I've long fought to ban congressional stock trading, but the House Republican-passed bill has MAJOR LOOPHOLES. Lawmakers can continue owning and selling stocks – so it won't solve the problem. Not gonna fly in the Senate. Members of Congress should not own, buy, or sell stocks. — Elizabeth Warren (@warren.senate.gov) 2026-07-23T17:15:30.753Z

Steil has defended the advance-notice requirement as a deterrent against trades based on confidential information. Because a planned sale would become public before execution, lawmakers could face scrutiny over the transaction and any concurrent government action involving the company in question.

Warren's objection highlights a fundamental divergence between the two approaches. Her preferred framework would require lawmakers to divest from individual stock ownership entirely, while the House bill preserves existing portfolios and regulates the manner in which holdings are liquidated.

Comparison to the CLARITY Act's Ethics Provisions

The Stop Insider Trading Act also covers a narrower set of federal officials than the ethics language included in the Digital Asset Market Clarity Act. Steil's bill applies to Congress and the specific immediate family members identified in the text, excluding the president, vice president, and their families from its restrictions.

A revised 616-page CLARITY Act draft takes a markedly different approach to crypto-related conflicts of interest. According to the proposed text reported this week, covered federal officials — including the president, vice president, lawmakers, and federal judges — would be prohibited from issuing or sponsoring digital assets through January 20, 2029. Crypto intermediaries would additionally be barred from listing assets issued or sponsored in violation of those provisions.

Unlike the permanent trading rules envisioned by Steil's bill, the CLARITY Act's ethics restrictions would sunset on the specified 2029 date.

Prediction-Market Legislation Targets Similar Conflicts

In parallel with the stock-trading legislation, Steil has introduced a separate measure addressing wagers placed through prediction platforms such as Kalshi and Polymarket. The House Administration Committee chairman unveiled the Stop Lawmakers from Predicting Act on June 18, citing the risk that officials could capitalize on information unavailable to the general public.

According to the House Administration Committee, the bill would bar members of Congress, their spouses, and dependent children from placing wagers on political outcomes or public-policy questions. Steil argued that lawmakers should be crafting policy rather than betting on its results.

The prediction-market bill's penalty structure closely mirrors that of the stock-trading legislation. A violation would carry a charge equal to $2,000 or 10% of the prohibited wager's value, whichever is greater, along with forfeiture of the net gain from the contract.

Public scrutiny of prediction markets has intensified following reports of individuals profiting from politically sensitive information. In one reported case, a soldier allegedly earned more than $400,000 from contracts tied to the removal of Venezuelan President Nicolás Maduro by US forces in January. Separately, a former Trump teleprompter operator was reported to have gained more than $90,000 from Kalshi contracts connected to words and phrases used during the president's speeches. Arizona officials subsequently cited this reported activity when tightening rules against government employees using non-public information on prediction platforms.

Steil's two proposals apply the same underlying principle to different financial instruments: congressional officials should not be positioned to convert privileged knowledge into personal financial returns. Their legislative trajectories now diverge, however — the stock-trading bill awaits Senate action, while the prediction-market measure remains at an earlier stage of the congressional process.

Source: CryptoNewsNet | crypto.news