Since October 1, Washington has been paralyzed. Congress remains bogged down in its budget divisions, and the crypto industry is paying the price: sixteen crypto ETF applications await approval, including funds tracking Solana, XRP, Litecoin and Dogecoin. Could this administrative paralysis paradoxically trigger a wave of approvals upon reopening?
In brief
- The US government shutdown, entering its third week, is blocking the approval of 16 crypto exchange-traded funds.
- The SEC has been operating with bare minimum staff since October 1, leaving ETF applications pending.
- Republicans and Democrats remain in a budget stalemate, with no clear timetable for resolving the crisis.
- Analysts predict a massive wave of approvals as soon as the shutdown ends, which could spark a new altcoin season.
A political blockage that paralyzes the crypto industry
October 1 marked the start of a new government shutdown in the United States. In the absence of a budget agreement between Republicans and Democrats, crucial federal agencies like the Securities and Exchange Commission are idling. Only essential staff remain on the job, while major regulatory decisions are frozen.
The impact on the crypto market is considerable. October was expected to be a make-or-break month with at least 16 crypto ETFs awaiting their final verdict. Affected products include funds following Solana, XRP, Litecoin and Dogecoin. Twenty-one other requests were filed during the first eight days of the month. All these files remain in administrative limbo today.
Vugar Usi Zade, director of operations at Bitget, puts this situation into perspective:
If the impasse is quickly resolved, authorizations should be postponed until late October or November. While this delay may weigh on sentiment in the short term by putting billions in institutional capital on hold, it ultimately highlights how much the ecosystem has matured.
The sources of disagreement are multiple. Republicans are demanding drastic budget cuts to curb a national debt that now exceeds $37.8 trillion, or about $111,000 per American citizen.
They are also calling for more funding for border surveillance. Opposite, the Democrats refuse any reduction in health spending and wish to extend tax credits which make health insurance more accessible.
The parliamentary calendar offers no immediate outcome. The Senate does not plan a vote until next Tuesday, and the House of Representatives remains in suspended session.
To end this crisis, Congress must pass either separate funding bills or a continuing resolution maintaining budgets at current levels. The problem ? Although Republicans control both chambers, they lack the votes in the Senate necessary to pass these texts without Democratic support.
A perfect storm for institutional adoption
This situation paradoxically illustrates what cryptos seek to solve. Nate Geraci, ETF analyst and president of NovaDius Wealth Management, points out the irony: “ Growing fiscal debt and the usual political theater are hampering these efforts. This is precisely what cryptocurrencies aim for “. His analysis predicts that once the shutdown ends, “the floodgates for spot crypto ETFs will open” with massive approvals.
This prospect excites the market. Bitfinex analysts anticipated as early as August that a wave of ETF approvals could spark a new altcoin season. The logic is simple: these products offer exposure to cryptos with less direct risk, thus attracting more cautious institutional and individual investors.
The recent regulatory context reinforces this optimism. In September, the SEC adopted new general standards allowing exchanges to list certain crypto products without systematic individual approval.
This framework was intended to speed up the examination processes. But the government shutdown completely neutralizes these advances.
This is the eleventh government shutdown in American history and the first since that of December 2018 to January 2019, which lasted 35 days. The record therefore remains to be beaten, but each day that passes further delays the evolution of the American crypto landscape. Approval deadlines expire one after the other without any decision being made.
The US crypto market finds itself in an unusual position: technically ready to pounce, but politically hindered. When Washington finally breaks this impasse, the industry could see its most transformative month since the approval of spot Bitcoin ETFs. The question is no longer if this wave will arrive, but when it will break.
Maximize your Tremplin.io experience with our 'Read to Earn' program! For every article you read, earn points and access exclusive rewards. Sign up now and start earning benefits.
