WASHINGTON, D.C. — As Congress weighs legislation to regulate the rapidly growing digital asset market, the absence of strong ethics safeguards could enable government officials to profit from the rules they help create, Democracy Defenders Action (DDA) said today.

DDA urged lawmakers to make ethics protections a key part of any digital asset legislation in its response submitted this week to the Senate Banking Committee’s request for input on a draft bill. Without clear rules around divestment, disclosure, and enforcement, legislation could open the door to corruption at the highest levels of government, the response stated.

DDA calls on Congress to adopt three core ethics measures in any legislation:

• A ban on the president, vice president, members of Congress, senior federal officials, federal judges, and Supreme Court justices from owning or trading cryptocurrency or holding ownership in companies that issue crypto assets. The ban would also cover their spouses and dependent children.

• A requirement that all senior officials report crypto holdings and transactions in public financial disclosures, as required under the Ethics in Government Act and the Stop Trading on Congressional Knowledge (STOCK) Act.

• A strong, independent enforcement system with authority to investigate potential violations, access blockchain and exchange data, and impose meaningful penalties. The legislation should also protect and incentivize whistleblowers who report misconduct.

The response makes clear that decentralized finance (DeFi) platforms must not be exempt from regulation. Exemptions would create dangerous loopholes for illicit finance, foreign influence, and corrupt political payments—while enabling public officials to obscure unethical or illegal crypto activity. The letter also urges Congress to preserve strong state-level investor protection and banking laws, which serve as critical checks on federal power and help prevent conflicts of interest.

Read the full letter and policy recommendations HERE

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Democracy Defenders Action brings together a nonpartisan team to work with national, state, and local allies across the country committed to upholding the rule of law, fighting against autocracy and defending the Constitution.