The Hong Kong Human Rights and Democracy Bill if it becomes law would require an annual review of Hong Kong special status under the US law, CNN reported.
The bill is seen as a challenge to the Chinese government amid tense US-China relations.
The US treats Hong Kong, which has its own legal systems, differently from the Chinese mainland, as far as trading is concerned.
Under the bill, the US President can slap sanctions against officials responsible for arbitrary detention of any individual of Hong Kong or human rights violations in the former British colony.
The bill also lays out a process for the US President to impose sanctions and travel restrictions on those who are found to be knowingly responsible for threatened or carried out arbitrary detention of any individual in Hong Kong, or other violations of internationally recognised human rights in the former British colony.
Besides, the bill would also provide for sanctions against those who violate the 1997 Sino-British Joint Declaration the pact under which Britain handed Hong Kong back to China.
Hong Kong has been witnessing unrest for the last six months. Pro-democracy protesters have accused China of violating human rights and encroaching on Hong Kong's protected freedom.
( With inputs from IANS )