Line your wallets: US bill targets crypto corruption

Democratic Senators Jeff Merkley and Chuck Schumer have introduced the End Crypto Corruption Act which aims to ban the President, Vice President, members of Congress, senior executive officials and their immediate families from investing in or promoting cryptocurrencies. The bill targets Donald Trump, whose crypto holdings reportedly make up nearly 40% of his net worth (valued at approximately US$2.9 billion) according to the State Democracy Defenders Action group.

The bill, which is supported by a group of Democratic senators, appears to be a response to the controversial launch of the $TRUMP and $MELANIA meme coins and Trump-backed World Liberty Financial’s latest stablecoin venture, which have raised concerns about corruption and profiteering from public office. Launched on 18 January 2025 via Trump's Twitter and Truth platform, the $TRUMP coin enjoyed a dizzying rally before a sharp correction, causing many to speculate on the legality and legitimacy of the venture.

Key Provisions

The bill prohibits any 'covered individual' or their spouse or dependent child from engaging in prohibited financial transactions during their term of service and for one year after leaving office. A 'prohibited financial transaction' includes:

1. Issuing, sponsoring or endorsing a cryptocurrency, meme coin, token, NFT, stablecoin or other digital asset sold for profit.

   
   

2. Holding any comparable financial interest acquired through synthetic means such as derivatives, options or warrants.

   
   

3. Holding such interests through aggregated products such as a mutual fund, exchange-traded fund or other similar means.

However, ‘prohibited financial transaction’ does not include the mere purchase, sale, holding or other conduct relating to financial instruments or assets routinely accessible to any member of the public. For example, stock trading by public officials based on information obtained through their office has been a long running source of controversy.

A ‘covered individual’ includes the President, Vice President, members of Congress, Senate-confirmed officials and special government employees in the Executive Office of the President. This would notably include figures like Elon Musk in his role at the Department of Government Efficiency (DOGE). Violations may result in civil fines, disgorgement, imprisonment (up to five years) or disqualification from holding United States public office.

While 20% of $TRUMP coins were made available to the public (200 million tokens), the remaining 80% (800 million tokens), were retained by CIC Digital LLC, a company linked to Trump. If the bill passes and Trump is barred from promoting, holding, or endorsing the $TRUMP coin, he could find himself in a precarious position as the beneficial holder of a large stake in the token. The law could also target other Trump family crypto initiatives like World Liberty Financial’s stablecoin project.

Unfortunately for Democrats hoping to restrain the President, the President is highly unlikely to sign any law which would restrain his family’s business ventures even if they can win some Republican support. It appears the bill is instead targeted at bringing greater publicity to concerns over the use of cryptocurrency as a vehicle for corruption. The conduct in question is likely to be addressed by laws of general application, and the issues raised are not specific to cryptocurrency related ventures. However, it does highlight concerns in relation to public officials taking financial positions in respect of legislative and administrative matters which they have the ability to shape, with market structure and stablecoin legislation currently before the US Congress. A partial solution may mean ensuring that ethics disclosure do extend not just to securities but also cryptocurrency and related ventures. Of course, any such standards and laws must also be enforced by authorities and ultimately by voters at the ballot box.

By Steven Pettigrove, Luke Misthos and Emma Assaf