The US government closed last Wednesday, deeming federal employees non-essential and forced the remaining employees to work unpaid (though they should receive backpay when the government is officially funded again). If the government resumes within the next few weeks, it should not have much impact on DC’s crypto policy making. However, the longer the shutdown, the slower the crypto effort will be.
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The government was closed on Wednesday, and at least at the time of reporting, it appears that Democrats and Republicans are not approaching a deal to reopen it.
Why is it important?
As I explained in last week’s newsletter, the immediate effect of shutting down is very simple. Market structure laws are delayed, federal agencies’ rulemaking is delayed, and the new Spot Crypto Exchange-Traded Funds won’t announce many hopes in the coming days.
If the shutdown is only a few days or potentially two weeks, these efforts should resume fairly seamlessly. If the shutdown exceeds that, the photo will be much muddy.
I’ll break it
The longest US government closure 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 at the time of reporting and could last for several days or even grow further.
Perhaps the most immediate and concrete effect of government closures on the cryptographic problem is on exchange sales funds. The Securities and Exchange Commission was expected to allow ETFs to track the price of assets like Solana and It will start last week. There was some movement last week and Monday, but the clock was gone before pushing through all the final paperwork, and the publisher hadn’t been launched yet.
The SEC was able to complete a pair of action-no-action letters even before the shutdown. Other agencies, such as the IRS, were able to publish interim guidance as well before the closure.
“It’s not a modest idea how busy the development of crypto policy has been.”
With the closure, he said policymakers are focusing on these types of regulatory actions.
On the legislative side, one person familiar with Washington, DC’s dynamics said he doesn’t expect a major change in the market structure law timeline if the shutdown ends within the next two weeks. Lawmakers are trying to retain possible markup, but by October 20, 2025, there will be a hearing where lawmakers discuss the bill before they vote to advance them to the full Senate (or House of Representatives), which is unlikely to happen regardless of when the shutdown will end, given that they are still working on the bill’s text.
Another individual familiar with these dynamics says that an additional complex factor for lawmakers and their staff is the fact that lawmakers writing market structure bills are unable to receive feedback or answers to questions they may have with these federal regulators, as the additional complex factor for lawmakers and their staff is currently determined by the regulatory bodies they may consult with.
Hammond said December is “still viable” to move the law through Congress now.
“The longer this shutdown continues, the more partisan bitterness permeates the necessary bipartisan discourse on important topics like crypto market structures,” Hammond said. “Even so, this shutdown drama will not affect the likelihood that market structure odds laws will be more likely to be enacted before the 2026 election rises.”
Hammond said he is watching to see if the Senate Bank and Agriculture Committee markup by Thanksgiving is.
this week
- There will be no hearings or events held by lawmakers around Crypto this week.
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