Congress has finally taken action to regulate the digital asset market. The Senate is expected to begin drafting legislation by the end of this month that could shape the future of cryptocurrencies in the United States. Unfortunately, in its eagerness to finalize the legal framework, Congress has left the backdoor to corruption wide open.
Cryptocurrency is relatively new. But money, regulatory power, and self-care are not. The Founding Fathers were well aware of the risks to the nation when powerful financial regulators had a financial stake in their decisions.
That’s why when the First Congress created the Treasury Department in 1789, lawmakers wrote a strict prohibition prohibiting officials from having a personal “concern or interest, directly or indirectly,” in transactions involving U.S. debt or other commercial or financial activities related to the department’s operations.
This principle, that regulators should not also be market participants, has guided American legislation for nearly 240 years.
When Congress created the Federal Reserve System in 1913, it prohibited board members from holding positions or stock in any “bank, banking institution, or trust company.” In 1934, Congress prohibited members of the Securities and Exchange Commission from participating “directly or indirectly in any stock market operation.” And in 1974, Congress prohibited members of the Commodity Futures Trading Commission from participating in “any contract market operation, directly or indirectly.”
So why is Congress looking to abandon that tradition when it comes to cryptocurrencies? Two major bills under consideration, the CLARITY Act and the Responsible Financial Innovation Act of 2025, lack any mention of specific restrictions on key decision makers participating in crypto markets.
The answer is obvious. President Trump has become a major participant in the cryptocurrency market, which regulators are tasked with monitoring. From the newly launched Trump and Melania meme coin to the ongoing relationship with World Liberty Financial and its stablecoins, the president’s involvement is substantial and unprecedented.
Of course, this comes with obvious self-handling risks. This also poses a significant risk to a fair and competitive market.
If the president could actually challenge the scale of cryptocurrencies, who would be willing or able to compete? With the resources of the executive branch, including the previously unprecedented ability of independent financial regulators to lead policy, there is a real risk that Mr. Trump could develop a digital asset policy to preserve and expand his financial wealth.
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As a result, the market will be biased toward the interests of the powerful and will no longer be a free market available to ordinary Americans. And that is exactly the opposite of the vision of cryptocurrencies in the first place.
Satoshi Nakamoto’s original 2008 Bitcoin White Paper explains that traditional markets required trust in central figures such as banks and financial institutions. Nakamoto’s solution was to create a form of currency that required no trust in a central figure or government oversight.
Unfortunately, it has become all too clear that some form of government regulation of the cryptocurrency market is critical to preventing the widespread fraud and market failures seen over the past decade. But that doesn’t mean we need to forget the problem Nakamoto was trying to solve: a system that can be exploited by key actors, including government regulators.
If you have a central figure, you should at least expect them to act with clean hands. Allowing public officials like the president to have a financial stake in the very markets they oversee creates a serious risk of skewing crypto markets in their favor and potentially harming ordinary Americans.
Fortunately, there are three simple steps Congress can take to protect crypto markets from regulatory corruption.
First, the president and other senior officials should be prohibited from issuing, owning, or trading in digital assets. Second, Congress should require all senior officials to publicly disclose their digital asset transactions and holdings. Finally, Congress should provide independent ethics agencies with the tools necessary to ensure compliance with ethics rules and impose meaningful sanctions.
Such restrictions are common sense. Congress certainly thought so when it passed the Treasury Act of 1789, the Securities Exchange Act of 1934, and the Commodity Futures Trading Commission Act of 1974. These proposals also honor the original philosophy of Nakamoto and other cryptocurrency founders, one that was skeptical of centralized authority and the abuses it could lead to.
Congress must remember the lessons of the past and respect the spirit of the future as it takes on the urgent task of crafting legislation that ensures fair and equitable digital asset markets.
Not only to protect the health of today’s markets, but also to secure the future of our economy, it is time to prevent high-ranking officials like the president from engaging in self-dealing and conflicts of interest in the crypto markets.
Virginia Canter is the lead ethics and anti-corruption attorney at the Democracy Defenders Fund, and Chris Swartz is the senior ethics advisor at the Democracy Defenders Fund.
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