US Government Shutdown Threatens Bitcoin ETF Approval by SEC

The US government shutdown could jeopardize the approval of a Bitcoin ETF by the SEC.
SEC Chair Gary Gensler expresses concerns over a skeletal staff operation during the shutdown, impacting crucial regulatory deadlines.

In a climate of intense anticipation for regulatory advancements within the crypto industry, all eyes have been on the forthcoming approval of a Spot Bitcoin (BTC) Exchange Traded Fund (ETF) in the United States. However, this anticipation is now overshadowed by the looming threat of a government shutdown.

The countdown to a potential government shutdown is down to just four days, casting a shadow of uncertainty over the operations of key regulatory bodies, particularly the Securities and Exchange Commission (SEC), which plays a pivotal role in approving the Bitcoin ETF.

Should the bipartisan effort to avert a shutdown fail, the SEC faces a challenging decision: to cease operations entirely or continue with reduced functionality, relying on any remaining funds from the fiscal year. According to Fox Business Journalist Eleanor Terrett, the SEC could maintain its full capacity if there are sufficient leftover funds to support its enforcement and review activities.

The clock is ticking with the next Bitcoin ETF approval deadline set for mid-October. However, given the potential fiscal constraints, the SEC may not view this approval as an immediate priority, potentially causing a delay in the eagerly awaited decision.

The history of government shutdowns and their impact on federal agencies is not new. SEC Chair Gary Gensler has voiced concerns about operating with a “skeletal” staff during a shutdown, precisely when crucial deadlines are looming. This situation adds to the urgency for clear directives from the SEC on ETF applications and other critical regulatory matters.

As former SEC official Anne Kelley points out, during previous shutdowns, the agency demonstrated some operational resilience by using budgetary flexibility. However, whether the SEC has the necessary funds this time remains uncertain.

US Falling Behind in Bitcoin ETF Race

These developments occur in a broader context where major economies have already embraced Spot Bitcoin ETFs, leaving the US lagging behind. Notably, market giants like BlackRock and Fidelity have entered this domain, heightening expectations in the crypto space.

The crypto industry now hangs in the balance, eagerly awaiting both the government’s maneuver to avoid a shutdown and the SEC’s subsequent course of action regarding the Spot Bitcoin ETF approval. With each passing day, anticipation among crypto enthusiasts and investors grows, all against a backdrop of regulatory uncertainty.