86% of Americans support it! The insider trading ban is out, and the families of lawmakers are fully regulated.

The U.S. House of Representatives is about to review the “Restoring Trust in Congress Act,” which prohibits members of Congress, their spouses, and dependents from owning, purchasing, or selling individual stocks, securities, commodities, or futures, completely eliminating insider trading. A poll from the University of Maryland shows that 86% of Americans support this ban, stemming from the market turmoil caused by Trump's “Day of Liberation” tariff policy, during which several lawmakers engaged in hundreds of suspicious transactions. It is rare for both parties to work together to push for this legislation, with Treasury Secretary Besant calling it “a necessary step to restore government integrity.”

The Restore Congressional Trust Act Completely Bans Insider Trading

(Source: U.S. House of Representatives)

Representative Anna Paulina Luna (Republican, Florida) confirmed that the long-stalled Restoring Confidence in Congress Act, due to the government shutdown, will undergo formal review in committee. “Speaker Johnson has notified me that once we reconvene and the government is up and running, the bill to prohibit insider trading will be discussed in committee,” Luna said. “This is a significant victory for America.”

The core content of the bill targeting insider trading includes prohibiting members of Congress, their spouses, and dependents from owning, purchasing, or selling individual stocks, securities, commodities, or futures. This means that the families of lawmakers will no longer be able to profit in the financial markets from insider information they possess. Compared to the previous “STOCK Act,” which only required the disclosure of trades, this new bill adopts a more comprehensive prohibition strategy.

The STOCK Act was passed in 2012, requiring members of Congress to publicly disclose trades within 45 days, but this system has not prevented insider trading, as there are no substantial penalties even after disclosure. Over the past decade, there have been several scandals involving lawmakers trading stocks based on policy information, but the penalties under the STOCK Act are minimal, with violators facing a maximum fine of only $200. This level of punishment is insignificant compared to the potential profits from trading, rendering the legislation effectively meaningless.

The “Restoring Confidence in Congress Act” seeks to fundamentally address this issue. By completely prohibiting legislators and their families from holding individual stocks, the possibility of conflicts of interest is eliminated. Legislators can still invest in diversified mutual funds or index funds, which are investment tools that do not experience significant fluctuations due to a single policy decision, thus eliminating the space for insider trading.

The timing of this legislation is noteworthy. Pushing this bill immediately after the government shutdown ends shows that the leadership of both parties is aware that public dissatisfaction with insider trading issues has reached a critical point. The House is expected to vote today at 4 PM (Eastern Time) to determine whether the longest government shutdown in U.S. history will finally come to an end, with discussions on the insider trading ban to follow closely.

“Liberation Day” trading scandal ignites public outrage

Previously, due to President Donald Trump's tariff policies earlier this year causing market turmoil, some lawmakers engaged in questionable trades, triggering strong public outrage. A poll conducted by the University of Maryland found that 86% of Americans support banning legislators from trading stocks, reflecting growing dissatisfaction with perceived conflicts of interest.

Earlier this year, reports indicated that several members of Congress and their families conducted hundreds of stock trades during the stock market's plunge and rebound following Trump's announcement of the “Day of Liberation” tariff policy in April. The “Day of Liberation” is the code name for the Trump administration's large-scale imposition of tariffs on China, the European Union, and other trading partners, which immediately triggered severe turmoil in global stock markets after the policy was announced.

A survey shows that some lawmakers began adjusting their investment portfolios a few days before the official announcement of the tariff policy, selling stocks in industries affected by the tariffs while buying defensive assets that may benefit from it. Even more questionable is the fact that the timing of these trades closely aligns with the internal discussions of the policy. Although lawmakers argue that the trades are based on public information, the public is not convinced, as ordinary investors cannot know the policy details in advance like lawmakers do.

Suspicious Transaction Characteristics During 'Liberation Day'

Abnormal Timing: Several lawmakers concentrated their trading 1-3 days before the tariff announcement.

Precise Direction: Sell off affected industries, buy into benefiting targets, with an exceptionally high success rate.

Large Scale: A single legislator's family trading volume reaches millions of dollars.

Significant Information Advantage: The trading strategy is highly consistent with subsequent policy impacts.

This insider trading behavior seriously undermines public trust in the government. While ordinary investors suffer heavy losses due to policy changes, the lawmakers who formulate these policies can profit by positioning themselves in advance. This unfairness has triggered unprecedented public outrage. The 86% approval rating shows that prohibiting lawmakers from trading stocks has become a bipartisan consensus.

Rare bipartisan endorsement by the Treasury Secretary

This bipartisan proposal has garnered support from various political factions, which is extremely rare in the current polarized political environment in the United States. Representatives Chip Roy (Republican from Texas) and Seth Magaziner (Democratic from Rhode Island) introduced this proposal together with Luna, and it has received support from progressive Democrats such as Alexandria Ocasio-Cortez (Democrat from New York) and libertarian-leaning Republicans like Tim Burchett (Republican from Tennessee).

Roy stated in September: “They didn't send us here to line our pockets. If you want to day trade, then leave Congress. It's that simple. If you come here with the trust of the American people, then do your job.” This straightforward statement resonated widely across party lines.

A more substantial endorsement comes from Treasury Secretary Scott Bansen. He expressed an open attitude towards the idea, stating that banning insider trading is “a necessary step to restore government integrity.” As a key economic official in the Trump administration, Bansen's support indicates that the executive branch also acknowledges the necessity of this reform. This consensus between the executive and legislative branches greatly enhances the likelihood of the bill's passage.

The collaboration between the two parties is driven by shared political pressure. For the Republican Party, supporting this bill can demonstrate their commitment to “draining the swamp”; for the Democratic Party, it represents a progressive agenda to combat privilege and corruption. Both parties face strong voter dissatisfaction regarding insider trading issues, and opposing this bill will incur a political cost in the next election.

The ban will extend to the cryptocurrency sector

At the same time, California Democratic Congressman Ro Khanna introduced an independent but related bill aimed at prohibiting U.S. officials (including the President and Congress members) from holding and trading cryptocurrencies. Khanna's proposal would ban elected officials, their spouses, and immediate family members from buying, selling, or creating cryptocurrencies. The proposal also requires them to transfer existing digital assets to blind trusts and prohibits them from accepting foreign payments related to cryptocurrencies.

This proposal directly points to President Trump and his family's conflict of interest in the cryptocurrency field. Previously, President Trump made a controversial decision to pardon Binance founder CZ. He admitted to money laundering crimes in 2023. Critics argue that this pardon has raised concerns about political influence and corruption in the digital asset space.

“Our president is seeking unprecedented wealth in American history for himself and his family,” Khanna said on MSNBC. “We cannot look the other way on this corruption,” he added. Khanna, representing Silicon Valley and serving as a member of the House Oversight Committee, stated that the legislation directly responds to “blatant corruption” and aims to prevent elected officials from profiting off assets they influence through policy.

The issue of insider trading in the cryptocurrency space is more complex and covert. Unlike traditional stock markets, the crypto market lacks mature regulatory and disclosure mechanisms, allowing officials to hide their holdings through multi-layer wallet structures. When the government introduces cryptocurrency-friendly policies, officials holding digital assets will benefit directly, making this conflict of interest harder to detect than in traditional stocks.

Insiders say that once the government is fully operational, these discussions could make rapid progress. If the insider trading ban and the cryptocurrency trading ban can be implemented, it would be the most thorough reform of the financial markets.