The US House of Representatives has narrowly backed a ban on most new share dealing by members of Congress, despite mounting criticism in the Senate that the plan leaves major loopholes for existing stock holdings.
The Stop Insider Trading Act passed the House by 232 votes to 198 on Wednesday, 22 July, and now moves to the Senate, where its future is uncertain. The bill was introduced in January by Wisconsin Republican Representative Bryan Steil, who has urged senators to send it to President Donald Trump for signature.
Under the legislation, members of Congress, along with their spouses and dependent children, would be barred from buying securities issued by publicly listed companies. The prohibition would apply only to new purchases, meaning lawmakers and their families could keep any individual shares they currently own.
Those existing holdings could still be sold, but only after advance disclosure. The bill requires public notice at least seven days, and no more than 14 days, before any planned sale, with filings made either to the clerk of the House or the secretary of the Senate.
Steil said the legislation was designed to close off opportunities for lawmakers to profit from non-public information obtained through their official roles. After the vote, he described the bill as “a major step forward for ethics reform on Capitol Hill.”
Financial penalties for breaches would combine a fixed charge with the loss of any gains made from an unlawful trade. Ethics committees in either chamber would be required to impose a fine of $2,000 or 10% of the value of the investment involved, whichever is greater, and any profits from the prohibited transaction would also have to be surrendered.
Although the measure attracted backing from both Republicans and Democrats, the margin was relatively tight for a reform billed as a major ethics overhaul. During the debate, Steil argued that Congress had not previously had such a clear-cut chance to vote on a restriction of this kind.
Warren leads Senate criticism
The Senate received the bill on Thursday, but early reaction underlined the resistance Steil’s proposal is likely to face there. Senator Elizabeth Warren, a Massachusetts Democrat who has advocated tougher limits on lawmakers’ financial dealings, rejected the House approach on the grounds that it allows current portfolios to remain intact.
“The bill has major loopholes,” Warren wrote on Thursday, insisting the text in its current form was “not gonna fly in the Senate.” She has argued that members of Congress should be banned outright from owning, buying or selling individual shares, rather than facing a rule that mainly targets future purchases while grandfathering in existing stakes.
Steil has defended the advance-notice requirement as a meaningful safeguard, saying that forcing public disclosure of intended sales before they are executed would expose any questionable trades to scrutiny, particularly if they coincided with government decisions affecting the companies involved.
The disagreement points to a fundamental divide between the two positions. Warren’s preferred model would effectively remove lawmakers from direct ownership of individual stocks, while the House proposal would allow them to hold on to current investments and focus regulation on the way those holdings are disposed of.
Overlap with wider ethics push on digital assets
The bill also covers a narrower group of federal officials than a separate ethics package tied to digital asset regulation. Steil’s measure applies only to members of Congress and their spouses and dependent children, and does not extend to the president, the vice president or their families.
By contrast, a revised 616-page draft of the Digital Asset Market Clarity Act – known as the CLARITY Act – would impose broader, time-limited restrictions on senior officials’ involvement in cryptocurrencies. According to the latest draft reported this week, covered federal officials including the president, vice president, members of Congress and federal judges would be prohibited from issuing or sponsoring digital assets until 20 January 2029.
Crypto intermediaries would also be barred from listing any assets created or sponsored in breach of those rules. Unlike Steil’s stock-trading proposal, which would introduce permanent restrictions, the CLARITY Act’s ethics provisions are designed to lapse on the specified 2029 date.
Parallel push to curb bets on politics
Alongside his stock-trading bill, Steil has put forward a separate proposal aimed at limiting lawmakers’ use of prediction markets such as Kalshi and Polymarket. On 18 June, the House Administration Committee chairman introduced the Stop Lawmakers from Predicting Act, arguing that elected officials should be shaping policy rather than gambling on how it turns out.
According to the House Administration Committee, the measure would prohibit members of Congress, their spouses and dependent children from placing bets on political outcomes or on questions relating to public policy. Its enforcement regime mirrors the penalties in the stock bill: a violation would trigger a fine of $2,000 or 10% of the value of the wager, whichever is higher, together with forfeiture of any net gains from the contract.
Concern over prediction markets has intensified after reports of substantial profits linked to political events. In one reported case, a soldier allegedly made more than $400,000 from contracts tied to the potential removal of Venezuelan President Nicolas Maduro by US forces in January.
Separately, a former Trump teleprompter operator was reported to have earned more than $90,000 from Kalshi contracts based on specific words and phrases used in the president’s speeches. Officials in Arizona later cited that episode while tightening rules restricting government employees from using non-public information on such platforms.
Both of Steil’s initiatives rest on the same principle: that those with access to privileged government information should not be able to convert that advantage into private financial gain, whether through share trading or wagers on political outcomes. For now, though, they are advancing at different speeds, with the stock-trading bill awaiting a potentially fraught reception in the Senate and the prediction-market proposal still at an earlier stage in the legislative process.
