Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC), told Bloomberg on September 20 that a government shutdown could hamper his agency.
Other reports indicate that the US government could shut down on October 1 as member states may not pass the bills needed to fund operations before the next fiscal year.
Gensler commented on the situation, saying:
“The public needs to understand that we will be largely a skeletal staff… so the normal supervision that we have of the markets will not be possible… because [however] many days [a shutdown] happens.”
Gensler said the SEC cannot review filings from companies seeking to go public and other applications during a shutdown. He also said the SEC might not be able to monitor the markets if a major event occurs, although he acknowledged that the markets would likely continue to function normally without the usual level of supervision.
Similar issues arose in late 2018 and early 2019 when the US government shut down for 35 days, limiting the SEC’s activities and creating a backlog.
The shutdown could impact SEC’s crypto operations
In light of Gensler’s statements, a government shutdown could impact several crypto-related regulatory decisions. Notably, the SEC is expected to make decisions on several Bitcoin spot ETFs in mid-October. Although the agency can delay these decisions outside of a shutdown, a shutdown makes delays almost certain.
Other cryptocurrency-related applications that may require a decision outside the shutdown period could also be delayed by a long-term backlog.
It is less clear what consequences a shutdown could have for enforcement. Federal courts continued to function during the last government shutdown. As such, high-profile SEC cases involving Coinbase and Binance could proceed as long as the courts have adequate funding and as long as the SEC’s attorneys remain available. However, a reduced workforce could limit the SEC’s ability to initiate new investigations and lawsuits.
Incidentally, the possibility of reduced SEC operations comes just one day after another SEC member suggested the agency could expand its enforcement efforts.
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