The U.S. government shutdown enters its fourth week, increasing pressure on lawmakers to break the budget impasse while addressing key issues related to digital assets. As the Senate prepares for another vote to reopen the government, Democratic senators are continuing their efforts to meet with crypto industry leaders and reignite debate over the currently stalled market structure bill.
In brief
- The US government shutdown is approaching its fourth week, with a new vote in the Senate to decide whether to reopen agencies.
- Despite the impasse, Senate Democrats are planning a roundtable with crypto industry executives to discuss the market structure bill.
- Limited SEC operations during the shutdown are delaying the approval of several crypto ETFs, including Litecoin and HBAR.
- Debates continue around competing bills on crypto regulation, as investors turn to Bitcoin and gold in times of uncertainty.
Political impasse does not slow down the dynamics of crypto regulation in Washington
The Senate is scheduled to vote Monday at 5:30 p.m. ET on an 11th attempt to end the shutdown. If the vote is validated and receives the presidential signature, federal agencies will reopen. Otherwise, the government paralysis, already one of the longest in American history, will continue.
The current impasse, which began on October 1, is second only to those of 1995 and 2018-2019 in duration.
Despite the budgetary blockage, lawmakers continue to move forward on other policy issues. On Wednesday, Democratic senators will host a roundtable with executives from major crypto companies, including Kraken, Coinbase, Ripple, Circle and others, to reignite discussions about market structure.
The debate on market structure intensifies in the Senate
The meeting, chaired by Senator Kirsten Gillibrand, aims to advance the US crypto market structure bill, which has been pending for months. This initiative comes after the presentation of a Democratic counterproposal earlier in October.
Critics say this release could harm decentralized finance (DeFi) and weaken bipartisan consensus around it. CLARITY Act passed in the House of Representatives in July.
The Senate bill is intended to be the counterpart of CLARITY Actwith the aim of establishing a comprehensive federal framework for digital assets and providing regulatory clarity for companies operating in the crypto sector.
Shutdown slows down key crypto ETF files
As political discussions continue, the shutdown is slowing progress on crypto ETF applications. The Securities and Exchange Commission (SEC), forced to operate with reduced staff, had to postpone several decisions.
The first missed deadline dates back to October 2, for the Litecoin ETF offered by Canary. Bloomberg analyst Eric Balchunas pointed out that Canary's Litecoin and HBAR ETFs were close to approval, but likely pushed back due to the shutdown.
October was expected to be a crucial month for crypto ETFs, however, with up to sixteen files awaiting decision, notably concerning Solana, XRP, Dogecoin and other assets. Large issuers include Bitwise, CoinShares, Grayscale, Fidelity, Canary Capital and VanEck, all of which have filed revised versions incorporating staking-related provisions.
The prolonged budgetary blockage and regulatory uncertainty, however, weigh on the morale of investors, who now favor Bitcoin and gold as safe havens. At the time of writing, Bitcoin remained slightly lower, around $107,790.
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