The Impact of Prolonged Government Shutdown on Crypto Regulation

The recent U.S. government shutdown has raised concerns about its potential impact on cryptocurrency policymaking. If the government reopens within a few weeks, it is unlikely to have a substantial effect on crypto regulation. However, a longer shutdown could lead to significant delays in market structure legislation, federal agency rulemaking, and the launch of new spot crypto exchange-traded funds. The longest government shutdown in U.S. history occurred between December 2018 and January 2019, and a similar scenario could unfold this time. The shutdown has already affected the launch of exchange-traded funds, with the Securities and Exchange Commission unable to finalize the necessary paperwork. Regulatory agencies like the IRS were able to publish interim guidance before the shutdown, but policymakers are now in limbo. The shutdown has also complicated the legislative process, with lawmakers facing challenges in receiving feedback from regulatory agencies. Despite these challenges, some experts believe that market structure legislation could still pass before the 2026 election. The situation is being closely monitored, and the outcome will depend on the duration of the shutdown and the ability of lawmakers to work together to pass crucial legislation.