Before any summer breaks kick in, Congress is crafting potential rules affecting how people, businesses and governments can use digital assets. Plus, they are considering what they must report about their own stock trades as lawmakers, all while trying to maintain US dominance in an AI chip war.

Let’s dig in.

Bid to ban congressional stock-trading

A bipartisan group of members in the House of Representatives that have competing bills to ban congressional stock trading have started to privately work together to craft a consensus bill.

Seth Magaziner (D-RI), Chip Roy (R-TX), Alexandria Ocasio-Cortez (D-NY), Pramila Jayapal (D-WA), Joe Morelle (D-NY), Tim Burchett (R-TN) and Brian Fitzpatrick (R-PA) have been trying to merge their proposals barring lawmakers from trading stocks.

Lawmakers in the group generally agree that the ban should extend to lawmakers’ spouses and dependents.

Sticking points include settling on how to penalize members who don’t abide by the ban – whether it’s through fines or Department of Justice intervention – and getting Republicans to focus on it while grappling with crafting a massive reconciliation package.

GENIUS Act hits headwinds

The bipartisan GENIUS Act is in jeopardy.

GENIUS stands for: ‘‘Guiding and Establishing National Innovation for US Stablecoins of 2025,” and it has the stated purpose of crafting a clear regulatory framework for payment stablecoins. It delineates the supervisory, examination, and enforcement regimes for stablecoins.

But Senate Democrats just blocked it, citing (among other things) concerns over President Donald Trump’s cryptocurrency business involvement. The vote came after months of intense negotiations between Democrats and Republicans and was 49-48, with GOP Senators Rand Paul and Josh Hawley joining Democrats to vote against advancing the bill.

Nine Democrats drafted a letter to list their concerns, saying: “The bill as it currently stands still has numerous issues that must be addressed, including adding stronger provisions on anti money laundering, foreign issuers, national security, preserving the safety and soundness of our financial system, and accountability for those who don’t meet the act’s requirements,” they wrote.

Digital asset regulatory framework

Several US House leaders have released a discussion draft of a bill to establish a regulatory framework for digital assets in the United States.

The House Committee on Financial Services, and House Committee on Agriculture Republicans – authoring the draft text – said it would help close current regulatory gaps by doing the following:

• requiring digital asset developers to provide accurate, relevant disclosures, including information relating to each digital asset project’s operation, ownership, and structure;
• providing a pathway to raise funds under the SEC’s jurisdiction;
• outlining a clear process to register with the CFTC for digital commodity trading;
  
• adding clarity to customer-facing digital asset institutions by establishing clear lines between the SEC and CFTC;
• creating comprehensive registration regimes to permit them to lawfully serve customers in digital assets.

State reserves of bitcoin

Arizona just signed into law a move allowing the state to hold bitcoin and other cryptocurrencies, following the lead of New Hampshire, which recently became the first state to pass some kind of reserve legislation.

Arizona’s law does not permit the investment of public funds; instead, it creates a reserve to hold cryptocurrencies found to be abandoned unclaimed property in the state. Although it doesn’t require any investment, it permits state officials to buy cryptocurrency on behalf of state funds, with a limit of 5% of public funds.

If other cryptocurrencies besides bitcoin have high enough market caps (more than $500 billion), they will be allowed as well. And the reserve will be administered by the state treasurer.

In other news involving state retirement funds and crypto, Wisconsin and Michigan have made purchases of bitcoin ETFs for inclusion in the funds.

Curbing China’s access to AI chips

US Senator Tom Cotton (R-AR) introduced a bill on Friday that would direct the Commerce Department to require location verification mechanisms for export-controlled AI chips to help curb China’s access to advanced semiconductor technology.

The bill is called the Chip Security Act, and it calls for AI chips under export regulations, and products containing those chips, to be fitted with location-tracking systems to help detect diversion, smuggling or other unauthorized use of the product.

The bill also calls for companies exporting the AI chips to report to the Bureau of Industry and Security if their products have been diverted away from their intended location or subject to tampering attempts.

“With these enhanced security measures, we can continue to expand access to US technology without compromising our national security,” Cotton said.

The bill comes just days after the Trump administration said it would rescind and modify a Biden-era rule that curbed the export of sophisticated artificial-intelligence chips. The regulation was aimed at further restricting AI chip and technology exports to keep advanced computing power in the United States and among its allies.

Cotton’s bill seeks to find more ways to block China’s access.