The U.S. government is on the verge of a partial shutdown, as the House of Representatives blocked a Senate-passed bill to fund the government and Speaker Kevin McCarthy's proposals failed to gain support from far-right members of the House. This impasse suggests that a shutdown may commence on October 1.
When a government shutdown occurs, it's due to Congress failing to pass appropriations legislation for the next fiscal year, resulting in the suspension of activities deemed "non-essential" across federal agencies and departments. Even if a shutdown lasts only a short period, the cryptocurrency bill will likely be pushed aside as lawmakers address other pressing issues when government operations resume.
During a government shutdown, digital asset legislation comes to a halt, and financial regulators like the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) operate with minimal staff. Following a shutdown in 2019, the SEC experienced limitations in its enforcement and oversight capabilities.
Sheila Warren, CEO of the Cryptocurrency Innovation Council, noted that Congress's priorities could shift from cryptocurrencies to other issues arising during the shutdown, which might lead to further disruptions as the 2024 elections approach. Treasury Secretary Janet Yellen has expressed concern about the government shutdown, labeling it as "dangerous and unnecessary" with potential economic consequences.
Despite some Democratic members of the House Financial Services Committee being critical of Republicans, particularly concerning oversight of the SEC, cryptocurrency-related bills pushed by Democrats, like the Financial Innovation and Technology for the 21st Century (FIT) Act and others, may not see action before October 1 due to the government funding issue.
Ron Hammond, director of government relations at the Blockchain Association, highlighted the challenges of passing key legislation in a divided Congress. He expressed concern about proposals related to stablecoins and market structures. However, he mentioned that cryptocurrency bills in the House have strong bipartisan support and may be addressed in November.
As of the time of this writing, Bitcoin prices have dipped below $27,000, though this appears unrelated to congressional spending bills or the SEC's delay in deciding on a spot Bitcoin exchange-traded fund. Ethereum, on the other hand, has surpassed the $1,600 mark, possibly influenced by companies announcing their plans to launch ETFs tied to Ethereum futures in early October.
