The U.S. government shut down this past Wednesday, furloughing any federal employees deemed non-essential and forcing the rest to work without pay (though they should receive backpay when the government is formally funded again). If the government reopens within the next few weeks, it shouldn’t have too much of an effect on D.C.’s crypto policymaking. The longer the shutdown stretches, however, the more delayed crypto efforts will be.
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The narrative
The government shut down on Wednesday, and at least as of press time, Democrats and Republicans do not appear to be close to a deal to reopen it.
Why it matters
As discussed in last week’s newsletter, the immediate effects of the shutdown are pretty straightforward: Market structure legislation will likely be delayed, federal agencies’ rulemaking will probably be delayed, and new spot crypto exchange-traded funds will not launch as many hoped in the coming days.
If the shutdown is just a few days — or potentially as long as two weeks — these efforts should resume pretty seamlessly. If the shutdown goes beyond that, the picture becomes much muddier.
Breaking it down
The longest U.S. government shutdown in history took place between December 2018 and January 2019, during President Donald Trump’s first term. At the time, Democrats controlled the House of Representatives while Republicans controlled the Senate. This latest shutdown is only a few days old as of press time, and could last just a few days or may stretch on further.
Perhaps the most immediate and tangible effect of the government shutdown on crypto issues is on exchange-traded funds. The Securities and Exchange Commission was expected to allow ETFs tracking the prices of assets like Solana and to launch this past week. While there was some movement last week and Monday, the clock ran out before all of the final paperwork could be pushed through, and the issuers have not yet been able to launch.
The SEC was able to finalize a pair of no-action letters prior to the shutdown as well. Other agencies, like the IRS, were similarly able to publish interim guidance prior to the shutdown.
Ron Hammond, head of Policy and Advocacy at Wintermute, told CoinDesk that, “It can’t be understated how busy the crypto policy developments have been.”
With the shutdown, policymakers are in limbo around these types of regulatory actions, he said.
On the legislative front, one individual familiar with the dynamics in Washington, D.C. said that they do not expect the timeline for market structure legislation to change much should the shutdown end within the next two weeks or so. While lawmakers are looking to hold a possible markup — a hearing where lawmakers debate bills before potentially voting to advance them to the full Senate (or House) — by Oct. 20, 2025, this seems unlikely, regardless of when the shutdown ends, given they are still working on the text of the bill.
Another individual familiar with these dynamics said an additional complicating factor for lawmakers and their staffers is the fact that the regulatory agencies they might consult with are currently furloughed, so the lawmakers writing the market structure bill won’t be able to receive feedback or answers to any questions they might have for these federal regulators.
Hammond said that December “is still feasible” for moving legislation through Congress at the moment.
“The longer this shutdown drags on, the more partisan bitterness seeps into the necessary bipartisan discourse on important topics like crypto market structure,” Hammond said. “Still, this shutdown drama isn’t affecting our calculus on odds of market structure legislation chances of passing being more probable than not before the 2026 election ramps up.”
Hammond said he was watching to see if a markup in the Senate Banking and Agriculture Committees by Thanksgiving.
This week
- There are no hearings or events being held by lawmakers this week around crypto.
If you’ve got thoughts or questions on what I should discuss next week or any other feedback you’d like to share, feel free to email me at nik@coindesk.com or find me on Bluesky @nikhileshde.bsky.social.
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See ya’ll next week!