The U.S. government experienced a shutdown this past Wednesday, resulting in the furlough of non-essential federal employees while others are required to continue working without pay, although they are expected to receive backpay once the government is funded again. Should the government resume operations in the coming weeks, it is not anticipated to significantly influence the cryptocurrency policy developments in Washington, D.C. However, an extended shutdown could lead to substantial delays in crypto initiatives.
The Current Situation
As of the latest updates, the government remains closed, and negotiations between Democratic and Republican leaders have not yielded any progress toward a resolution.
Significance of the Shutdown
As highlighted in the previous week’s newsletter, the immediate implications of the shutdown are clear: legislative efforts related to market structure are likely to face delays, rulemaking from federal agencies will likely stall, and the anticipated introduction of new spot crypto exchange-traded funds (ETFs) will be postponed beyond initial expectations.
Potential Impact on Crypto Initiatives
If the shutdown lasts only a few days—possibly up to two weeks—these initiatives may resume with minimal disruption. However, if the closure extends beyond this period, the situation could become significantly more complicated.
A Historical Perspective
The longest shutdown in U.S. history occurred between December 2018 and January 2019, during President Donald Trump’s administration, when Democrats held the House while Republicans controlled the Senate. The current shutdown is still in its early days and may either conclude shortly or extend further.
Exchange-Traded Funds at Risk
One of the most immediate consequences of the government shutdown on the cryptocurrency sector pertains to exchange-traded funds. The Securities and Exchange Commission (SEC) was anticipated to approve ETFs linked to the prices of assets such as Solana and Litecoin last week. Although there was some progress made earlier, the necessary paperwork was not completed in time, preventing issuers from launching as planned.
Regulatory Agencies’ Actions Before Shutdown
Prior to the shutdown, the SEC successfully finalized two no-action letters. Additionally, agencies like the IRS managed to issue interim guidance before the government closure took effect.
Insights from Industry Experts
Ron Hammond, the head of Policy and Advocacy at Wintermute, remarked on the hectic pace of developments in crypto policy, stating that the shutdown has left policymakers in a state of uncertainty regarding regulatory actions. One source familiar with D.C. dynamics indicated that they do not foresee significant changes to the market structure legislation timeline if the shutdown concludes within the next couple of weeks. Although there are plans for a potential markup—where lawmakers review bills before voting to advance them—by October 20, 2025, this seems unlikely given that the bill’s text is still under development.
Challenges for Lawmakers
Another source noted that the furlough of regulatory agencies complicates matters for lawmakers and their staff, as they cannot seek needed feedback or answers for the market structure bill from those agencies currently on furlough.
Looking Ahead
Hammond expressed optimism that a legislative push could still occur in December. He warned, however, that if the shutdown continues, it might exacerbate partisan tensions over critical issues like the crypto market structure. Despite this, he remains hopeful about the chances of market structure legislation passing before the 2026 elections become a pressing concern, with a keen eye on potential Senate Banking and Agriculture Committee markups by Thanksgiving.
This Week’s Legislative Agenda
No hearings or events related to cryptocurrency legislation are scheduled for this week. Should you have suggestions or queries about topics for next week’s discussion, feel free to reach out via email or connect on social media. Looking forward to engaging with you next week!
