House Representative Jared Polis (D) of Colorado has raised questions about the ethics of US congresspersons holding virtual currency. When lawmakers have non-public foreknowledge of possible cryptocurrency regulations or investigations, those lawmakers could potentially conduct insider trading, capitalizing on their exclusive information.
Polis is a leader in the advancement of blockchain on the national stage, having founded the US Congressional Blockchain Caucus, and leading efforts to promote the use of blockchain and place controls on the possible taxation of digital currency gains.
His petition to the House Committee on Ethics (directed at its chairwoman, Susan Brooks, and ranking member Ted Deutch) first lays out recent government actions pertaining to cryptocurrency, setting the groundwork for his argument that cryptocurrency is ripe for manipulation by entities with privileged information.
Having established precedents of federal regulations treating cryptocurrency as "asset holdings" and "commodities," Polis then draws the conclusion that, since members of Congress are required to divulge their stock-market-related assets and commodities holdings, they should be required to report their virtual currency holdings as well.
He goes on to invoke the Stop Trading On Congressional Knowledge (STOCK) Act (an Act of Congress enacted April 4, 2012, designed to combat insider trading), which requires congresspersons to "disclose in real time the purchase, sale or exchange transaction involving stocks, bonds and commodities futures, or other securities where the amount of the transaction is an asset exceeds $1,000."
Therefore, writes Polis, "if a Member … engages in a transaction involving a virtual currency that exceeds $1,000, including the purchase of … an ICO or a commodities future, they must provide an updated financial disclosure."
Polis' petition is not a bill or a proposal, obviously, but it's a step in the direction of treating digital currency like any other asset, and admitting its vulnerability to malfeasance – with the CFTC and SEC swiveling their gaze to bad actors in the private sector, it bears acknowledging that the public sector should look to its ethics as well.