Crypto▼ Bearish
CLARITY Act Ethics Clause Exposes Stock Trading Loophole
The Senate bill would ban officials from profiting from digital assets. The same standard does not apply to stocks, leaving a gap that critics say undermines market confidence.
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A proposed ethics clause in the Senate's CLARITY Act would bar presidents and federal officials from issuing or personally profiting from cryptocurrencies. The provision, still under negotiation, targets a conflict-of-interest gap that current stock trading rules do not address.
Under the STOCK Act, members of Congress must disclose stock trades within 30 to 45 days. Disclosure does not prevent the trade. A lawmaker can buy shares in a defense contractor, sit on a committee that votes on defense spending, and sell the shares before the disclosure deadline. By the time the trade appears in a public filing, the market impact has already occurred.
Digital assets pose a more direct risk. A public official can promote a token to millions of followers, signal support for favorable regulation, and personally benefit from the price rise. The CLARITY Act clause prohibits the official from issuing or profiting from digital assets. The same logic does not apply to stocks. A lawmaker can hold shares in a bank while sponsoring deregulation legislation that boosts that sector.
Multiple ethics watchdogs have argued for consistent rules across asset classes. The technology behind the asset should not determine whether a conflict exists. The financial relationship between the official and the investment does, they said.