Washington Lawmakers Hold on to Crypto Holdings Despite Calls for New Laws in Wake of FTX Collapse

The collapse of the crypto exchange FTX affected a plethora of companies and raised concerns about the stability of the digital coin market. Despite this, as per the data provided by Capitol Trades, a website that tracks stock trades by lawmakers on Capitol Hill, at least nine lawmakers across both the House and Senate traded over a dozen different crypto stocks and assets between 2021 to 2022.

Although some politicians sold their assets after FTX's demise, the majority of them held on. The ownership of crypto assets by lawmakers has raised concerns over conflicts of interest and presumably the ability to write legislation aimed at regulating the industry. Kedric Payne, an ethics attorney at the Campaign Legal Center said that Congress could prevent these conflicts by implementing a ban on members and spouses trading individual stocks unless they are in a blind trust. 

Walter Shaub, the director of the United States Office of Government Ethics under former Presidents Barack Obama and Donald Trump, called for Congress to ban members from trading or owning conflicting investments. “It is outrageous that members of Congress would be invested in cryptocurrency and related companies at a time when the FTX scandal has necessitated congressional oversight and possible reform,” he said. Although some lawmakers who owned crypto investments criticized Congress's failure to pass laws that would give financial regulators more authority to police the industry.

Senator Pat Toomey, who was retiring from Congress back then in 2022, said that he had no plans to sell his cryptocurrency investments, despite tweeting after the FTX collapse that "the impact to Americans...might have been mitigated if there were a sensible, legislatively authorized, American regulatory framework for digital assets." He and his wife owned between $2,000 to $30,000 combined, between Grayscale Ethereum Trust (ETHE:US) and Grayscale Bitcoin Trust (GBTC:US) as of the end of 2021, according to his annual financial disclosure reviewed by CNBC.

Keeping in view the concerns revolving around crypto regulations and potential conflicting trades executed by politicians, it seems imperative for lawmakers to join their heads in finding the best possible solution.