US Lawmaker Pushes Crypto Ban for Politicians After High-Profile Pardon

A U.S. representative is set to introduce legislation banning elected officials from owning or launching cryptocurrencies, citing concerns over corruption following a recent pardon of a major crypto executive.

The Proposal: Divestment and Blind Trusts

Rep. Ro Khanna (D-Calif.) plans to file the bill this week, requiring lawmakers to divest crypto holdings or place them in blind trusts to prevent conflicts of interest. The measure extends Khanna’s 2023 effort to ban congressional stock trading, which gained bipartisan support but stalled in committee. Khanna framed it as a “corruption issue,” arguing that politicians should not profit from or influence digital assets, similar to restrictions on foreign money.

• Key Requirements: Full divestment or blind trusts for crypto assets.
• Scope: Applies to owning, creating, or trading cryptocurrencies.
• Rationale: Prevents financial ties from influencing policy.

Context: Pardon Sparks Ethics Debate

The push comes after President Donald Trump’s pardon of Changpeng Zhao, who pleaded guilty to anti-money laundering violations in 2023, resulting in a $4.3 billion settlement and four months in prison. Khanna accused the pardon of “blatant corruption,” alleging financial links between Zhao and the Trump family’s crypto venture, World Liberty Finance. He claimed the pardon removed legal barriers for Zhao’s business involvement, potentially enabling re-entry into the U.S. market.

Khanna stated on MSNBC’s Morning Joe: “It is so illegal. It is right in our faces.” He highlighted alleged ties to illicit activities, including funding to Hamas, Iran, and child abusers, positioning the ban as a safeguard against foreign influence.

Broader Implications for Crypto Regulation

The legislation could reshape Washington’s engagement with digital assets, amid a wave of crypto-related pardons under Trump. It addresses growing unease over politicians’ financial stakes in the sector, potentially leading to stricter ethics rules. For DeFi and blockchain projects, this signals heightened scrutiny on lobbying and investments, impacting $150 billion+ TVL.

In summary, Khanna’s crypto ban proposal escalates debates on political integrity, responding to the pardon with calls for divestment in a maturing industry.