Government Shutdown Halts SEC Activity
Investment bank TD Cowen reports that the US Securities and Exchange Commission (SEC) has effectively paused its non-emergency functions due to the federal government shutdown, which entered its second week on Oct. 6, 2025. As a result, key tasks such as crypto ETF approval processes have been placed on hold, delaying the launch of multiple exchange-traded products awaiting regulatory sign-off.
Impact on Crypto Regulation
Agencies permitted to operate during shutdowns—such as the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation—will briefly assume greater influence over digital asset policy. However, the SEC’s inactivity risks creating regulatory gaps, particularly in areas like tokenization exemptions and stablecoin custody frameworks.
Market and Industry Reactions
Crypto market participants have exhibited mixed responses. Bitcoin spiked past $127,000 as investors sought safe-haven assets amid political deadlock. Some analysts, including Geoffrey Kendrick of Standard Chartered, view the shutdown as an additional positive driver for Bitcoin prices, forecasting potential targets above $135,000 if gridlock persists.
Outlook and Resolution
Policy progress, including updates to crypto guidance and ETF approvals, remains in abeyance until Congress resolves funding. Upon resumption, SEC staff will face substantial backlogs, potentially extending delays. Cowen strategists recommend monitoring developments in other regulatory bodies and exploring interim compliance pathways for tokenized securities.
The shutdown underscores the sensitivity of crypto policy to broader political dynamics and highlights the need for contingency frameworks that ensure continuity of essential regulatory functions during funding disruptions.
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