The U.S. House of Representatives has approved legislation intended to tighten trading rules for members of Congress by limiting their ability to buy publicly traded stocks. The bill, known as the Stop Insider Trading Act, passed the House on Wednesday in a 232-198 vote and now heads to the Senate for consideration.

The measure was sponsored by Republican Representative Bryan Steil of Wisconsin, who has argued that the legislation would reduce incentives for lawmakers to benefit from information that is not available to the public. Speaking on the House floor after the vote, Steil said the bill would “ensure no lawmaker can profit off of insider information” and would establish “strict penalties” for violations.

What the House bill would prohibit

The Stop Insider Trading Act is aimed at the conflict that can arise when public officials trade in markets while having access to nonpublic information. Under the bill, members of Congress, their spouses and their dependent children would be barred from purchasing publicly traded stocks.

Steil said the measure is designed to prevent new stock purchases by lawmakers and their immediate family members. The proposal would not, however, force lawmakers to divest stocks they already own.

The bill also sets out an enforcement framework for alleged violations. According to Steil’s remarks on the House floor, violations would carry a fine equal to $2,000 or 10% of the transaction value, along with disgorgement of profits. Steil also said violators could be required to forfeit any gains if they fail to comply with the rules.

Another provision highlighted by Steil concerns existing holdings. Although the bill would restrict new purchases, he said members of Congress would be required to provide seven days’ notice before selling stocks they already hold. Steil presented that notice requirement as a deterrent against insider trading.

The distinction between purchases, sales and existing holdings is central to the proposal because the bill does not impose a blanket ban on lawmakers’ market participation. Instead, it targets the point at which new equity positions are acquired while adding notice and penalty provisions around other activity.

Critics say existing holdings remain a loophole

Despite the House vote, some Democrats have said the proposal does not go far enough to eliminate conflicts of interest. The main criticism is that the bill would allow lawmakers to continue holding and selling stocks they already own, rather than requiring divestment.

Senator Elizabeth Warren said on Thursday that the legislation contains “major loopholes.” Because lawmakers could still own and sell previously held stocks, Warren said the bill “won’t solve the problem” and suggested the approach is unlikely to advance in the Senate. Her position, as reflected in her comments, is that members of Congress should not own, buy or sell stocks at all.

The debate over the bill centers on whether a ban on new purchases is sufficient to address the risk of lawmakers acting on market-sensitive information, or whether restrictions should also cover ownership and sales of existing stock positions. That disagreement is also a practical test of how far Congress is willing to go in separating public office from personal exposure to public equity markets.

Comparison with Senate crypto policy discussions

The Stop Insider Trading Act is narrower than other ethics and market-related proposals being discussed in Congress. Unlike the proposed Digital Asset Market Clarity Act, a Senate measure focused on cryptocurrency market structure, Steil’s bill is limited to investment restrictions for members of Congress. It does not extend the same restrictions to the president or vice president and their families.

Earlier discussion of the Digital Asset Market Clarity Act has included provisions addressing token activity by public officials. As described in connection with that measure, it would bar U.S. public officials from issuing or sponsoring tokens until 2029.

The difference between the two proposals reflects separate legislative approaches to traditional financial markets and digital assets. The insider trading bill focuses on elected officials’ stock activity, while the crypto-focused legislation is framed around market structure and public officials’ involvement in digital assets.

For those tracking governance and market regulation, the Senate’s handling of the two measures will show whether ethics-style restrictions are expanded beyond stocks or remain separated by policy area.

Related prediction-market legislation

The House vote came after Steil sponsored separate legislation focused on trading behavior on prediction market platforms. Steil previously backed the Stop Lawmakers from Predicting Act, introduced in June, which aimed to prevent certain public officials, their spouses and their children from “wagering on public policy issues and political outcomes.”

Prediction markets have drawn renewed attention following reports of large bets tied to real-world political events. Cointelegraph previously reported on an incident involving a soldier accused of placing more than $400,000 in bets on Kalshi and Polymarket outcomes related to Venezuela President Nicolás Maduro, who was removed by U.S. forces in January.

Earlier reporting also described claims that Donald Trump’s teleprompter operator made more than $100,000 in bets on Kalshi event contracts connected to phrases used in the president’s speeches.

Steil’s prediction-market bill proposed a penalty structure similar to the stock trading proposal. Violators would pay a $2,000 fee or 10% of the value of prohibited bets placed on the platforms. That structure mirrors the stock trading bill’s use of fines and disgorgement-style penalties to reduce incentives for trading or wagering based on privileged information.

Taken together, the stock-trading and prediction-market proposals show a broader legislative focus on public officials’ access to information that may be valuable in financial or event-based markets. The proposals address different markets, but both use restrictions and penalties to reduce incentives for officials or their families to trade or wager on matters connected to public policy.

Next steps in the Senate

With the Stop Insider Trading Act now before the Senate, lawmakers will decide whether to preserve the House version’s focus on new purchases or broaden the restrictions to address the objections raised by critics.

The central question is whether the Senate will modify the bill to limit not only new stock purchases, but also ownership and sales of existing holdings. The outcome will determine how far Congress is prepared to go in restricting lawmakers’ participation in public equity markets while separate discussions continue over crypto-related ethics and market-structure rules.